HomeMy WebLinkAboutItem 13h - Financial Advisory Services relating to CalPERS
DATE: June 18, 2019
TO: Honorable Mayor and City Council
FROM: Hue Quach, Administrative Services Director
By: Shama P. Curian, Human Resources Administrator
SUBJECT: PROFESSIONAL SERVICES AGREEMENT WITH URBAN FUTURES,
INC. FOR FINANCIAL ADVISORY SERVICES RELATING TO RISING
PENSION COSTS AND UNFUNDED ACCRUED LIABILITY WITH THE
CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM
(“CalPERS”) IN THE AMOUNT OF $25,000
Recommendation: Approve
SUMMARY
The City of Arcadia is in need of consultant services to conduct a comprehensive
financial condition review to determine necessary steps to mitigate rising pension costs
and unfunded accrued liabilities with the California Public Employees’ Retirement
System (“CalPERS”).
While the Citizens’ Financial Advisory Committee addressed acute, short-term
challenges to alleviate some of the City’s fiscal stress, they recognized that CalPERS is
arguably the single largest cost driver in municipal organizations today, and cannot be
nebulously analyzed for a viable long-term solution. Thus, the Citizens’ Financial
Advisory Committee recommended that their role be expanded and extended in order to
further research the City’s unfunded pension and accrued liabilities. Additionally,
because of the nature and the complexity of CalPERS, their recommendation included
obtaining financial advisory services to assist in this research with the goal of paying
down these obligations as quickly as possible in order to save interest costs over time.
It is recommended that Council approve, and authorize and direct the City Manager to
execute a Professional Services Agreement with Urban Futures, Inc., (“UFI”) for
financial advisory services relating to rising pension costs and unfunded accrued liability
with the California Public Employees’ Retirement System in the amount of $25,000. If
the City decides to utilize Urban Futures, Inc. for the implementation of the financial
solutions that may be identified, the additional cost would not exceed $15,000.
Professional Services Agreement for
Financial Advisory Services with Urban Futures, Inc.
June 18, 2019
Page 2 of 3
BACKGROUND
In February 2018, the City Council established the Citizen’s Financial Advisory
Committee. The guiding principle of the Committee was to assess the City’s long-range
forecast and provide recommendations with the intent of cost containment without
compromising the quality of services. As a result of many meetings and analyses, the
Citizen’s Financial Advisory Committee provided both short-term and long-term
recommendations that aligned with the City Council goals and objectives. One of the
recommendations was to conduct a comprehensive PERS unfunded liability study to
assess the value of repaying or refinancing some or all of the City’s unfunded accrued
liabilities (“UAL”). At their November 7, 2018, meeting, after the presentation from Urban
Futures, Incorporated, the Committee unanimously determined that an expert
consultant is needed to analyze and address alternatives to the current payment plan,
as well as future cash flow needed to pay the escalating CalPERS Pension and UAL
costs. Alternatives could include refinancing the various unfunded liabilities into a single
amortization period (called a “fresh start”), accelerating payments on the existing
liabilities, issuing pension bonds, and blended options to reduce the overall costs as
much as possible without exceeding available resources. Each of these alternatives
involves a complexity of calculations and technical discussions with CalPERS staff,
which are time consuming and require a level of familiarity and expertise not necessarily
contained within the organization.
Urban Futures, Inc. has extensive experience and familiarity with CalPERS actuaries
and have assisted public agencies with implementing efficient pension management
strategies for long-term solutions. Since its incorporation in 1972, UFI has served nearly
half of the 88 cities in Los Angeles County; and in 2017 created the Pension Focus
Group to assist public agencies with comprehensively addressing retirement costs and
liabilities.
The most recent municipal organizations to have acquired UFI’s services are : City of
Glendora, City of Simi Valley, Rowland Water District, City of San Fernando, City of
Desert Hot Springs, City of Culver City, South Orange County Wastewater Authority,
and San Gabriel Valley Council of Governments.
UFI’s municipal advisory scope of work will comprise of an in-depth analysis of the
City’s CalPERS Unfunded Accrued Liabilities, comprehensive review of the unique
pension variables, as well as current and future financial challenges in order to
determine sound alternatives and develop a sustainable plan for the City. The review
will include an assessment of all the pension plans in both safety and miscellaneous
groups for the purpose of developing a customized Pension Model and Amortization
Schedules. The evaluation will also involve an extensive cost/benefit analysis containing
considerations of opportunity costs. UFI will then be able to identify concerns and align
City’s options and resources to provide potential financial solutions. Additionally, UFI
Professional Services Agreement for
Financial Advisory Services with Urban Futures, Inc.
June 18, 2019
Page 2 of 3
will provide an executive summary report detailing the process, their findings, and the
recommendations.
The Project Team that will be assigned to the City of Arcadia includes Chief Executive
Officer Michael P. Busch, Director Julio F. Morales, and Managing Director James P.
Morris. With the most senior staff assigned to the project, UFI will provide the analysis
needed to determine the most prudent financial path tailored to our financial needs and
objectives.
ENVIRONMENTAL ANALYSIS
The proposed action does not constitute a project under t he California Environmental
Quality Act (“CEQA”), and it can be seen with certainty that it will have no impact on the
environment. Thus, this matter is exempt under CEQA.
FISCAL IMPACT
Expected costs would not exceed $25,000 and will inc lude the baseline Pension Model,
the analysis needed to determine viable alternatives, as well as the recommendations
that are specific to the City’s unique financial circumstance. If the City decides to utilize
UFI for implementation of the financial solutions, the additional hourly costs would be
extra, and expected to fall between $5,000 and $15,000 dependent upon the number of
hours and the complexity of the proposed solutions.
RECOMMENDATION
It is recommended that the City Council approve, and authorize and direct the City
Manager to execute, a Professional Services Agreement with Urban Futures, Inc., for
financial advisory services relating to rising pension costs and unfunded accrued liability
with the California Public Employees’ Retirement System (“CalPERS”) in the amount of
$25,000.
Attachments: Proposed Professional Services Agreement with Urban Futures, Inc.
Urban Futures Inc. Proposal for Financial Advisory Services
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PROFESSIONAL SERVICES AGREEMENT REGARDING
FINANCIAL ADVISORY SERVICES
1. PARTIES AND DATE.
This Agreement is made and entered into this ____ day of ____________, 20 19,
by and between the City of Arcadia, a charter city organized under the Constitution and
laws of the State of California with its principal place of business at 240 West
Huntington Drive, Arcadia, California 91066 -6021 ("City") and Urban Futures
Incorporated, ” a California corporation with its principal place of business at 17821 E.
17th Street, Suite 245, Tustin, California, 92780 ("Consultant"). City and Consultant are
sometimes individually referred to as “Party” and collectively as “Parties.”
2. RECITALS.
2.1 Consultant.
Consultant desires to perform and assume responsibility for the provision of
certain professional services required by the City on the terms and conditions set forth
in this Agreement. Consultant represents that it is experienced in providing Financial
Advisory services to public clients, is licensed in the State of California, and is familiar
with the plans of City.
2.2 Project.
City desires to engage Consultant to render such services for the CalPERS
pension study, development, and implementation of an efficient pension management
strategy project (“Project”) as set forth in this Agreement.
3. TERMS.
3.1 Scope of Services and Term.
3.1.1 General Scope of Services. Consultant promises and agrees to
furnish to the City all labor, materials, tools, equipment, services, and incidental and
customary work necessary to fully and adequately supply the professional pension
management strategy project consulting services necessary for the Project ("Services").
The Services are more particularly described in Exhibit "A" attached hereto and
incorporated herein by reference. All Services shall be subject to, and performed in
accordance with, this Agreement, the exhibits attached hereto and incorporated herein
by reference, and all applicable local, state and federal laws, rules and regulations.
3.1.2 Term. The term of this Agreement shall be from July 1, 2019
through June 30, 2020, unless earlier terminated as provided herein. Consultant shall
complete the Services within the term of this Agreement, and shall meet any other
established schedules and deadlines.
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3.2 Responsibilities of Consultant.
3.2.1 Control and Payment of Subordinates; Independent Contractor .
The Services shall be performed by Consultant or under its supervision. Consultant will
determine the means, methods and details of performing the Services subject to the
requirements of this Agreement. City retains Consultant on an independent contractor
basis and not as an employee. Consultant retains the right to perform similar or
different services for others during the term of this Agreement. Any additional personnel
performing the Services under this Agreement on behalf of Consultant shall also not be
employees of City and shall at all times be under Consultant's exclusive direction and
control. Consultant shall pay all wages, salaries, and other amounts due such
personnel in connection with their performance of Services under this Agreement and
as required by law. Consultant shall be responsible for all reports and obligations
respecting such additional personnel, including, but not limited to: social security taxes,
income tax withholding, unemployment insurance, disability insurance, and workers'
compensation insurance.
3.2.2 Schedule of Services. Consultant shall perform the Services
expeditiously, within the term of this Agreement, and in accordance with the Schedule of
Services set forth in Exhibit "B" attached hereto and incorporated herein by reference.
Consultant represents that it has the professional and technical personnel required to
perform the Services in conformance with such conditions. In order to facilitate
Consultant's conformance with the Schedule, City shall respond to Consultant's
submittals in a timely manner. Upon request of City, Consultant shall provide a more
detailed schedule of anticipated performance to meet the Schedule of Services.
3.2.3 Conformance to Applicable Requirements. All work prepared by
Consultant shall be subject to the prior written approval of City.
3.2.4 Substitution of Key Personnel. Consultant has represented to City
that certain key personnel will perform and coordinate the Services under this
Agreement. Should one or more of such personnel become unavailable, Consultant
may substitute other personnel of at least equal competence upon prior written approval
of City. In the event that City and Consultant cannot agree as to the substitution of key
personnel, City shall be entitled to terminate this Agreement for cause. As discussed
below, any personnel who fail or refuse to perform the Services in a manner acceptable
to the City, or who are determined by the City to be uncooperative, incompetent, a
threat to the adequate or timely completion of the Project or a threat to the safety of
persons or property, shall be promptly removed from the Project by the Consultant at
the request of the City. The key personnel for performance of this Agreement are as
follows: Michael P. Busch, Julio F. Morales, and James P. Morris.
3.2.5 City’s Representative. The City hereby designates Hue Quach,
Administrative Services Director or his or her designee, to act as its representative for
the performance of this Agreement (“City’s Representative”). City’s Representative
shall have the power to act on behalf of the City for all purposes under this Contract.
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Consultant shall not accept direction or orders from any person other than the City’s
Representative or his or her designee.
3.2.6 Consultant’s Representative. Consultant hereby designates
Michael P. Busch or his or her designee, to act as its representative for the performance
of this Agreement (“Consultant’s Representative”). Consultant’s Representative shall
have full authority to represent and act on behalf of the Consultant for all purposes
under this Agreement. The Consultant’s Representative shall supervise and direct the
Services, using his best skill and attention, and shall be responsible for all means,
methods, techniques, sequences and procedures and for the satisfactory coordination
of all portions of the Services under this Agreement.
3.2.7 Coordination of Services. Consultant agrees to work closely with
City staff in the performance of Services and shall be available to City's staff,
consultants and other staff at all reasonable times.
3.2.8 Standard of Care; Performance of Employees . Consultant shall
perform all Services under this Agreement in a skillful and competent manner,
consistent with the standards generally recognized as being employed by professionals
in the same discipline in the State of California. Consultant represents and maintains
that it is skilled in the professional calling necessary to perform the Services. Finally,
Consultant represents that it, its employees and subcontractors have all licenses,
permits, qualifications and approvals of whatever nature that are legally required to
perform the Services, including a City Business License, and that such licenses and
approvals shall be maintained throughout the term of this Agreement. As provided for in
the indemnification provisions of this Agreement, Consultant shall perform, at its own
cost and expense and without reimbursement from the City, any services necessary to
correct errors or omissions which are caused by the Consultant’s failure to comply with
the standard of care provided for herein. Any employee of the Consultant or its sub -
consultants who is determined by the City to be uncooperative, incompetent, a threat to
the adequate or timely completion of the Project, a threat to the safety of persons or
property, or any employee who fails or refuses to perform the Services in a manner
acceptable to the City, shall be promptly removed from the Project by the Consultant
and shall not be re-employed to perform any of the Services or to work on the Project.
3.2.9 Laws and Regulations. Consultant shall keep itself fully informed of
and in compliance with all local, state and federal laws, rules and regulations in any
manner affecting the performance of the Project or the Services, including all Cal/OSHA
requirements, and shall give all notices required by law. Consultant shall be liable for all
violations of such laws and regulations in connection with Services. If the Consultant
performs any work knowing it to be contrary to such laws, rules and regulations and
without giving written notice to the City, Consultant shall be solely responsible f or all
costs arising therefrom. Consultant shall defend, indemnify and hold City, its officials,
directors, officers, and employees free and harmless, pursuant to the indemnification
provisions of this Agreement, from any claim or liability arising out of any failure or
alleged failure to comply with such laws, rules or regulations.
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3.2.9.1 Immigration Reform and Control Act. Consultant
acknowledges that Consultant, and all subcontractors hired by Consultant to perform
services under this Agreement, are aware of and understand the Immigration Reform
and Control Act ("IRCA"). Consultant is and shall remain in compliance with the IRCA
and shall ensure that any subcontractors hired by Consultant to perform services under
this Agreement are in compliance with the IRCA. In addition, Consultant agrees to
indemnify, defend and hold harmless the City, its directors, officials, officers and
employees, from any liability, damages or causes of action arising out of or relating to
any claims that Consultant's employees, or the employees of any subcontractor hired by
Consultant, are not authorized to work in the United States for Consultant or its
subcontractor and/or any other claims based upon alleged IRCA violations committed
by Consultant or Consultant's subcontractor(s).
3.2.10 Insurance.
3.2.10.1 Time for Compliance. Consultant shall not
commence Work under this Agreement until it has provided evidence satisfactory to the
City that it has secured all insurance required under this section. In addition, Co nsultant
shall not allow any subcontractor to commence work on any subcontract until it has
provided evidence satisfactory to the City that the subcontractor has secured all
insurance required under this section; provided, however, that in lieu thereof, th e
Consultant may provide evidence to the City that all subcontractors are additional
insureds under the Consultant’s policies of insurance.
3.2.10.2 Minimum Requirements. Consultant shall, at its
expense, procure and maintain for the duration of the A greement insurance against
claims for injuries to persons or damages to property which may arise from or in
connection with the performance of the Agreement by the Consultant, its agents,
representatives, employees, subcontractors and volunteers. Consultant shall also
name and obtain insurer’s consent to naming City, its directors, officials, officers, and
employees as an additional insured with proof of certificate of insurance that they are an
additional insured. Such insurance shall meet at least the following minimum levels of
coverage:
(A) Minimum Scope of Insurance. Coverage shall be
when commercially available (occurrence based) at least as broad as the latest version
of the following: (1) General Liability: Insurance Services Office Commercial General
Liability coverage for premises and operations, contractual liability, personal injury,
bodily injury, independent contractors, broadform property damage, explosion, collapse,
and underground, products and completed operations (2) Automobile Liability:
Insurance Services Office Business Auto coverage for any auto owned, leased, hired,
and borrowed by Consultant or for which Consultant is responsible; and (3) Workers’
Compensation and Employer’s Liability: Workers’ Compensation insurance as required
by the State of California and Employer’s Liability Insurance.
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The City, its directors, officials, officers, and employees shall be listed as additional
insured. Any deductibles or self -insured retentions must be declared to and approved
by City and conform to the requirements provided in Section 3.2.10.6 herein.
(B) Minimum Limits of Insurance. Consultant shall
maintain limits no less than: (1) General Liability: $1,000,000 combined single limit per
occurrence for bodily injury, personal injury and property damage, with an aggregate
limit of $ 4,000,000. If Commercial General Liability Insurance or other form with
general aggregate limit is used, either the general aggregate limit shall apply separately
to this Agreement/location or the general aggregate limit shall be twice the required
occurrence limit; (2) Automobile Liability: $1,000,000 combined single limit per accident
for bodily injury and property damage; and (3) Workers’ Compensation and Employer’s
Liability: Workers’ Compensation limits as required by the Labor Code of the State of
California. Employer’s Liability limits of $1,000,000 per accident for bodily injury or
disease.
3.2.10.3 Professional Liability. Consultant shall procure and
maintain, and require its sub-consultants to procure and maintain, for a period of three
(3) years following completion of the Project, errors and omissions liability insurance
appropriate to their profession. Such insurance shall be in an amount not less than
$1,000,000 per claim, and shall be endorsed to include contractual liability.
3.2.10.4 Insurance Endorsements. The insurance policies
shall contain the following provisions, or Consultant shall provide endorsements on
forms supplied or approved by the City to add the following provis ions to the insurance
policies:
(A) General Liability. The general liability policy shall be
endorsed to state that: (1) the City, its directors, officials, officers, and employees shall
be covered as additional insured with respect to liability ari sing out of Services
operations and for completed operations performed by or on behalf of the Consultant,
including materials, parts or equipment furnished in connection with such work; and (2)
the insurance coverage shall be primary insurance as respects the City, its directors,
officials, officers, and employees, or if excess, shall stand in an unbroken chain of
coverage excess of the Consultant’s scheduled underlying coverage. Any insurance or
self-insurance maintained by the City, its directors, officials, officers, employees and
volunteers shall be excess of the Consultant’s insurance and shall not be called upon to
contribute with it in any way.
(B) Automobile Liability. The automobile liability policy
shall be endorsed to state that: (1) the City, its directors, officials, officers, and
employees shall be covered as additional insureds with respect to the ownership,
operation, maintenance, use, loading or unloading of any auto owned, leased, hired or
borrowed by the Consultant or for which the C onsultant is responsible; and (2) the
insurance coverage shall be primary insurance as respects the City, its directors,
officials, officers, and employees, or if excess, shall stand in an unbroken chain of
coverage excess of the Consultant’s scheduled und erlying coverage. Any insurance or
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self-insurance maintained by the City, its directors, officials, officers, and employees
shall be excess of the Consultant’s insurance and shall not be called upon to contribute
with it in any way.
(C) Workers’ Compensation and Employers Liability
Coverage. The insurer shall agree to waive all rights of subrogation against the City, its
directors, officials, officers, and employees for losses paid under the terms of the
insurance policy which arise from work performed by the Consultant.
(D) All Coverages. Each insurance policy required by this
Agreement shall be endorsed to state that: (A) coverage shall not be, reduced or
canceled except after thirty (30) days prior written notice by certified mail, return receipt
requested of cancellation, of intended non-renewal or endorsement reduction in limit or
scope of coverage; provided, however, that in the event of cancellation due solely to
non-payment of premium, ten (10) days notice of cancellation for non -payment of
premium may instead be given to the City.; and (B) any failure to comply with reporting
or other provisions of the policies, including breaches of warranties, shall not affect
coverage provided to the City, its directors, officials, officers, and employees.
3.2.10.5 Separation of Insureds; No Special Limitations. All
insurance required by this Section shall contain standard separation of insureds
provisions. In addition, such insurance shall not contain any special limitations on the
scope of protection afforded to the City, its directors, officials, officers, and employees.
3.2.10.6 Deductibles and Self-Insurance Retentions. Any
deductibles or self-insured retentions must be declared to and approved by the City.
Consultant shall guarantee that, at the option of the City, either: (1) the insurer shall
reduce or eliminate such deductibles or self -insured retentions as respects the City, its
directors, officials, officers, and employees; or (2) the Consultant shall procure a bond
guaranteeing payment of losses and related investigation costs, claims and
administrative and defense expenses.
3.2.10.7 Acceptability of Insurers. Insurance is to be placed
with insurers with a current A.M. Best’s rating no less than A:VII, admitted or approved
to do business in California, and satisfactory to the City.
3.2.10.8 Verification of Coverage. Consultant shall furnish City
with complete and accurate copies of current certificates of insurance and
endorsements effecting coverage required by this Agreement on forms satisfactory to
the City. The certificates and endorsements for each insurance policy shall be signed
by a person authorized by that insurer to bind coverage on its behalf, and shall be on
forms provided by the City if requested. Copies of all certificates and endorsements
must 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, at any
time.
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3.2.10.9 Safety. Consultant shall execute and maintain its
work so as to avoid injury or damage to any person or property. In carrying out its
Services, the Consultant shall at all times be in compliance with all applicable local,
state and federal laws, rules and regulations, and shall exe rcise all necessary
precautions for the safety of employees appropriate to the nature of the work and the
conditions under which the work is to be performed. Safety precautions as applicable
shall include, but shall not be limited to: (A) adequate life p rotection and life saving
equipment and procedures; (B) instructions in accident prevention for all employees and
subcontractors, such as safe walkways, scaffolds, fall protection ladders, bridges, gang
planks, confined space procedures, trenching and shor ing, equipment and other safety
devices, equipment and wearing apparel as are necessary or lawfully required to
prevent accidents or injuries; and (C) adequate facilities for the proper inspection and
maintenance of all safety measures.
3.2.10.10 Material Breach. Lack of insurance does not negate
Consultant’s obligations under this Agreement. Maintenance of proper insurance
coverage is a material element of this Agreement and failure to maintain or renew
coverage or to provide evidence of renewal may be treated by the City as a material
breach of the Agreement.
3.3 Fees and Payments.
3.3.1 Compensation. Consultant shall receive compensation, including
reimbursements which receive the City’s prior written authorization, for all Services
rendered under this Agreement at the rates set forth in Exhibit "C" attached hereto and
incorporated herein by reference. T he costs will not exceed $25,000 and will include
the first two integrated and successive phases: 1. Development of a pension model
based on the City’s CalPERS Unfunded Accrued Liabilities, and 2. The Development of
financial solutions to help address the City’s pension liabilities. The areas that this
encompasses areoutlined in The Request for Proposals for Retirement Benefit Options,
Scope of Services. Additional costs will need written approval of the City Manager. If the
City decides to utilize UFI for the implementation of the financial solutions, as outlined in
phase 3 of Exhibit A, the additional costs would be extra, but not to exceed $15,000
without written approval from the City Manager. Extra Work may be authorized, as
described below, and if authorized, will be compensated at the rates and manner set
forth in this Agreement.
3.3.2 Payment of Compensation. Consultant shall submit to City a
monthly itemized statement which indicates work completed and hours of Services
rendered by Consultant. The statement shall describe the amount of Services and
supplies provided since the initial commencement date, or since the start of the
subsequent billing periods, as appropriate, through the date of the statement. City
shall, within forty-five (45) days of receiving such statement, review the statement and
pay all approved charges thereon.
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3.3.3 Reimbursement for Expenses. Consultant shall not be reimbursed
for any expenses unless prior written authorization is obtained from the City.
3.3.4 Extra Work. At any time during the term of this Agreement, City
may request that Consultant perform Extra Work. As used herein, "Ext ra Work" means
any work which is determined by City to be necessary for the proper completion of the
Project, but which the parties did not reasonably anticipate would be necessary at the
execution of this Agreement. Consultant shall not perform, nor be c ompensated for,
Extra Work without prior written authorization from City's Representative.
3.4 Accounting Records.
3.4.1 Maintenance and Inspection. Consultant shall maintain complete
and accurate records with respect to all costs and expenses incurred under this
Agreement. All such records shall be clearly identifiable. Consultant shall allow a
representative of City during normal business hours to examine, audit, and make
transcripts or copies of such records and any other documents created pursuan t to this
Agreement. Consultant shall allow inspection of all work, data, documents, proceedings,
and activities related to the Agreement for a period of three (3) years from the date of
final payment under this Agreement.
3.5 General Provisions.
3.5.1 Termination of Agreement.
3.5.1.1 Grounds for Termination. City may, by written notice
to Consultant, terminate the whole or any part of this Agreement at any time and without
cause by giving written notice to Consultant of such termination, and spec ifying the
effective date thereof, at least seven (7) days before the effective date of such
termination. Upon termination, Consultant shall be compensated only for those services
which have been adequately rendered to City, and Consultant shall be entitl ed to no
further compensation. Consultant may not terminate this Agreement except for cause.
A termination without cause by City shall not act as or be deemed a waiver of any
potential known or unknown City claims associated with Consultant’s performance prior
to the date of termination.
3.5.1.2 Effect of Termination. If this Agreement is terminated
as provided herein, City may require Consultant to provide all finished or unfinished
Documents and Data and other information of any kind prepared by Co nsultant in
connection with the performance of Services under this Agreement. Consultant shall be
required to provide such document and other information within fifteen (15) days of the
request.
3.5.1.3 Additional Services. In the event this Agreement is
terminated in whole or in part as provided herein, City may procure, upon such terms
and in such manner as it may determine appropriate, services similar to those
terminated.
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3.5.2 Delivery of Notices. All notices permitted or required under this
Agreement shall be given to the respective parties at the following address, or at such
other address as the respective parties may provide in writing for this purpose:
Consultant:
Urban Futures, Incorporated
17821 E. 17th Street, Suite 245
Tustin, CA 92780
Attn: Michael P. Busch, CEO/President
City:
City of Arcadia
240 West Huntington drive
Arcadia, CA 91007
Attn: Hue Quach, Administrative Services Director
Such notice shall be deemed made when personally delivered or when mailed, forty-
eight (48) hours after deposit in the U.S. Mail, first class postage prepaid and
addressed to the party at its applicable address. Actual notice shall be deemed
adequate notice on the date actual notice occurred, regardless of the m ethod of service.
3.5.3 Ownership of Materials and Confidentiality.
3.5.3.1 Documents & Data; Licensing of Intellectual Property.
This Agreement creates a non-exclusive and perpetual license for City to copy, use,
modify, reuse, or sublicense any and all copyrights, designs, and other intellectual
property embodied in plans, specifications, studies, drawings, estimates, and other
documents or works of authorship fixed in any tangible medium of expression, including
but not limited to, physical drawings or data magnetically or otherwise recorded on
computer diskettes, which are prepared or caused to be prepared by Consultant under
this Agreement (“Documents & Data”). Consultant shall require all subcontractors to
agree in writing that City is granted a non-exclusive and perpetual license for any
Documents & Data the subcontractor prepares under this Agreement. Consultant
represents and warrants that Consultant has the legal right to license any and all
Documents & Data. Consultant makes no such representation and warranty in regard
to Documents & Data which were prepared by design professionals other than
Consultant or provided to Consultant by the City. City shall not be limited in any way in
its use of the Documents and Data at any time, provided that any such use not within
the purposes intended by this Agreement shall be at City’s sole risk.
3.5.3.2 Confidentiality. Except as otherwise required by
California law, all ideas, memoranda, specifications, plans, procedures, drawings,
descriptions, computer program data, input record data, written information, and other
Documents and Data either created by or provided to Consultant in connection with the
performance of this Agreement shall be held confidential by Consultant. Such materials
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shall not, without the prior written consent of City, be used by Consultant for any
purposes other than the performance of the Services. Nor shall such materials be
disclosed to any person or entity not connected with the performance of the Services or
the Project. Nothing furnished to Consultant which is otherwise known to Consultant or
is generally known, or has become known, to the related industry shall be deemed
confidential. Consultant shall not use City's name or insignia, photographs of the
Project, or any publicity pertaining to the Services or the Project in any magazine, trade
paper, newspaper, television or radio production or other similar medium without the
prior written consent of City.
3.5.4 Cooperation; Further Acts. The Parties shall fully cooperate with
one another, and shall take any additional acts or sign any additional documents as
may be necessary, appropriate or convenient to attain the purposes of this Agreement.
3.5.5 Indemnification.
3.5.5.1 To the fullest extent permitted by law, Consultant shall
defend, indemnify and hold the City, its officials, officers, and employees free and
harmless from any and all claims, demands, causes of action, costs, expenses, liability,
loss, damage or injury, in law or equity, to property or persons, including wrongful death,
in any manner arising out of or incident to any alleged acts, omissions or willful
misconduct of Consultant, its officials, officers, employees, agents, consultants and
contractors arising out of or in connection with the performance of the Services, the
Project or this Agreement, including without limitation the payment of all consequential
damages and attorney’s fees and other related costs and expenses. Notwithstanding
the foregoing, to the extent Consultant’s Se rvices are subject to Civil Code Section
2782.8, the above indemnity shall be limited, to the extent required by Civil Code
Section 2782.8, to claims that arise out of, pertain to, or relate to the negligence,
recklessness, or willful misconduct of the Consultant. Consultant shall defend with
Legal Counsel of City’s choosing, at Consultant’s own cost, expense and risk, any and
all such aforesaid suits, actions or other legal proceedings of every kind that may be
brought or instituted against City, its directors, officials, officers, and employees.
Consultant shall pay and satisfy any judgment, award or decree that may be rendered
against City or its directors, officials, officers, and employees, in any such suit, action or
other legal proceeding arising from Consultant’s performance of the Services, the
Project or this Agreement; except to the extent that liability is caused by the active
negligence or willful misconduct by the City or its directors, officials, officers, and
employees. Consultant shall reimburse City and its directors, officials, officers, and
employees, for any and all legal expenses and costs incurred by each of them in
connection therewith or in enforcing the indemnity herein provided. Consultant’s
obligation to indemnify shall not be re stricted to insurance proceeds, if any, received by
the City, its directors, officials, officers, and employees, and shall take effect
immediately upon execution of this Agreement.
Revised 04/13
11
3.5.5.2 The duty to defend and to hold harmless, as set forth
above, shall include the duty to defend as established by Section 2778 of the California
Civil Code, and the duty to defend shall arise upon the making of any claim or demand
against the City, its respective officials, officers, agents, employees and representatives,
notwithstanding that no adjudication of the underlying facts has occurred, and whether
or not Consultant has been named in the claim or lawsuit.
3.5.6 Entire Agreement. This Agreement contains the entire Agreement
of the Parties with respect to the subject matter hereof, and supersedes all prior
negotiations, understandings or agreements. This Agreement may only be modified by
a writing signed by both Parties.
3.5.7 Attorney’s Fees. If either party commences an action against the
other party, either legal, administrative or otherwise, arising out of or in connection with
this Agreement, the prevailing party in such litigation shall be entitled to have and
recover from the losing party reasonable attorneys’ fees and all other costs of such
action.
3.5.8 Governing Law. This Agreement shall be governed by the laws of
the State of California. Venue shall be in Los Angeles County.
3.5.9 Time of Essence. Time is of the essence for each and every
provision of this Agreement.
3.5.10 City's Right to Employ Other Consultants. City reserves right to
employ other consultants in connection with this Project.
3.5.11 Successors and Assigns. This Agreement shall be binding on the
successors and assigns of the Parties.
3.5.12 Assignment or Transfer. Consultant shall not assign, hypothecate,
or transfer, either directly or by operation of law, this Agreement or any interest herein
without the prior written consent of the City. Any attempt to do so shall be null and void,
and any assignees, hypothecates or transferees shall acquire no right or interest by
reason of such attempted assignment, hypothecation or transfer.
3.5.13 Construction; References; Captions. Since the Parties or their
agents have participated fully in the preparation of this Agreement, the language of this
Agreement shall be construed simply, according to its fair meaning, and not strictly for
or against any Party. Any term referencing time, days or period for performance shall
be deemed calendar days and not work days. All references to Consultant include all
personnel, employees, agents, and subcontractors of Consultant, except as otherwise
specified in this Agreement. All references to City include its elected officials, officers,
and employees except as otherwise specified in this Agreement. The captions of the
various articles and paragraphs are for convenience and ease of reference only, and do
not define, limit, augment, or describe the scope, content, or intent of this Agreement.
Revised 04/13
12
3.5.14 Amendment; Modification. No supplement, modification, or
amendment of this Agreement shall be binding unless executed in writing and signed by
both Parties.
3.5.15 Waiver. No waiver of any default shall constitute a waiver of any
other default or breach, whether of the same or o ther covenant or condition. No waiver,
benefit, privilege, or service voluntarily given or performed by a Party shall give the
other Party any contractual rights by custom, estoppel, or otherwise.
3.5.16 No Third Party Beneficiaries. There are no intended third party
beneficiaries of any right or obligation assumed by the Parties.
3.5.17 Invalidity; Severability. If any portion of this Agreement is declared
invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the
remaining provisions shall continue in full force and effect.
3.5.18 Prohibited Interests. Consultant maintains and warrants that it has
not employed nor retained any company or person, other than a bona fide employee
working solely for Consultant, to solicit or secure this Agreement. Further, Consultant
warrants that it has not paid nor has it agreed to pay any company or person, other than
a bona fide employee working solely for Consultant, any fee, commission, percentage,
brokerage fee, gift or other consideration contingent upon or resulting from the award or
making of this Agreement. For breach or violation of this warranty, City shall have the
right to rescind this Agreement without liability. For the term of this Agreement, no
member, officer or employee of City, during the term of his or her service with City, shall
have any direct interest in this Agreement, or obtain any present or anticipated material
benefit arising therefrom.
3.5.19 Equal Opportunity Employment. Consultant represents that it is an
equal opportunity employer and it shall not discriminate against any subcontractor,
employee or applicant for employment because of race, religion, color, national origin,
handicap, ancestry, sex, sexual orientation or age. Such non -discrimination shall
include, but not be limited to, all activities related to initial employment, upgrading,
demotion, transfer, recruitment or recruitment advertising, layoff or termination.
Consultant shall also comply with all relevant provisions of City's Minority Business
Enterprise program, Affirmative Action Plan or other related programs or guidelines
currently in effect or hereinafter enacted.
3.5.20 Labor Certification. By its signature hereunder, Consultant certifies
that it is aware of the provisions of Section 3700 of the California Labor Code which
require every employer to be insured against liability for Worker's Compensation or to
undertake self-insurance in accordance with the provisions of that Code, and agrees to
comply with such provisions before commencing the performance of the Services.
Revised 04/13
13
3.5.21 Authority to Enter Agreement. Consultant has all requisite power
and authority to conduct its business and to execute, deliver, and perform the
Agreement. Each Party warrants that the individuals who have signed this Agreement
have the legal power, right, and authority to make this Agreement and bind each
respective Party.
3.5.22 Counterparts. This Agreement may be signed in counterparts,
each of which shall constitute an original.
3.5.23 Exhibits and Recitals. All Exhibits and Recitals contained herein
are hereby incorporated into this Agreement by this reference.
3.6 Subcontracting.
3.6.1 Prior Approval Required. Consultant shall not subcontract any
portion of the work required by this Agreement, except as expressly stated herein,
without prior written approval of City. Subcontracts, if any, shall contain a provision
making them subject to all provisions stipulated in this Agreement.
///
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[SIGNATURES ON THE NEXT PAGE]
Revised 04/13
14
In witness whereof the Parties have executed this Professional Services Agreement
on the date set forth below.
CITY OF ARCADIA URBAN FUTURES, INC.
By __ By ____________________________
Dominic Lazzaretto Signature
City Manager
_______________________________
Date: ______________________ Print Name and Title
Date: __________________________
ATTEST:
___________________________ By____________________________
City Clerk Signature
APPROVED AS TO FORM: ______________________________
Print Name and Title
___________________________ Date: _________________________
Stephen P. Deitsch
City Attorney CONCUR:
______________________________
Hue Quach
Administrative Services Director
A-1
EXHIBIT "A"
SCOPE OF SERVICES
Scope of Services
The focus of our engagement will be on addressing your retirement costs, which will be
comprised of three integrated and successive phases:
1. Develop a pension model based on your CalPERS Unfunded Accrued Liabilities
(UAL).
2. Develop financial solutions to help address your pension liabilities
3. Assist in implementing and executing the financial solutions
We will assist staff with analysis and decision-making relating to the City’s pension and
related financial issues, as well as serve on as-needed and as-requested basis to assist
the City on other finance and budget-related matters.
We commence by building a customized pension model, based on the City’s
Amortization Bases - 19 for the Miscellaneous Plan and 17 for the Safety Plan. We
develop a model that corresponds to the UAL for the 1 st Tier “Classic” plan because a
significant majority (98%) of the UAL is concentrated in the 1st Tier or Classic Plans.
Several of the City’s key pension factors are summarized below:
UAL is equal to $142 million: $45 million Miscellaneous and $96 for the Safety
Plan.
Annual UAL payments (FY 19-20) are equal to $10 million, UAL payments
increase steadily each year.
Annual UAL payments peak in 2031 ($14.8 million) – a 68% increase from FY
19-20 levels.
Annual normal costs are equal to approximately $6.7 million.
Total CalPERS combined pension payments (Normal + UAL) for FY 19 -20 are
equal to $17 million
We use the data from CalPERS’ actuarial reports (amortization bases, schedules, and
assumptions) as the basis for our pension model. CalPERS provides a sensitivity
analysis within each report to provide an indication of the impact of change in
investment performance and/or discount rate on the UAL.
As we have done with other municipal clients, we are comfortable using
CalPERS actuarial data to perform scenario/sensitivity analysis in order to be
cost-effective. If the City would like to determine the impact of using different
assumptions other than those in CalPERS’ actuarial report, we can help the City
select an actuarial firm to perform the calculations.
1. CALPERS UAL PENSION ANALYSIS & MODELING
A-1
The cash flows from our pension model provide the foundation for our scenario
analysis. In addition to developing financial solutions to address your pension liabilities,
UFI can analyze and address related retirement issues for bargaining unit negotiations
and budget purposes including:
Employee Cost Sharing
Impact of cost of living increase on pension costs
Pre-payment strategy
Development of pension stabilization fund
Use of reserves
Impact of using different investment strategies (outside 115 Trust)
Once the model is developed and data is analyzed, UFI will hold an in -person meeting
to present basic findings and discuss potential financial solutions to the City Manager
and Finance Director. We will commence this process by determining the City’s
financial objectives: 1) maximize budgetary / cash flow relief or 2) maximize total UAL
payment savings.
OPEB - The City has taken steps to limit its OPEB benefits paid to employees
hired after January 1, 2012, which has helped to limit its OPEB liability. The City
has also established and made contributions into an OPEB 115 Trust. Although
these are steps in the right direction, the City’s Net OPEB Liability is more than
$17 million, which is just over 11% funded.
Although the requested scope for services for this engagement is intended to
cover just pension liabilities, UFI strongly encourages the City to include OPEB
funding costs as part of its retirement costs projections. We you suggest you
obtain long-term “pay-go” cost projections from your OPEB actuary, in order to
incorporate the expected “pay-go” retiree medical premiums into our retirement
costs projections. With this information, UFI can work with the City to assess
potential OPEB cost saving strategies.
The results from the model and scenario analysis can simply be incorporated into your
existing long-range financial planning model.
In developing potential financial solutions and recommendations, UFI takes a
comprehensive perspective of the City’s financial position. Our solutions take into
consideration all the City’s major long-term financial obligations, including:
UAL + Normal Costs
OPEB
Debt Service on Long-term bonds
Capital Improvement Plan (CIP)
Projected Salary and Rate Increases
2. DEVELOP FINANCIAL SOLUTIONS AND RECOMMENDATIONS
A-1
After our initial analysis and findings presentation, we obtain feedback from City staff
(and Finance Committee) regarding the most viable financial solutions. Specifically, we
will discuss minimum required annual payments and how to best apply Additional
Discretionary Payments (ADPs) or “pre-payments”. We will discuss the financial impact
as well as the benefits and risks of various funding solutions, including:
Cost Allocation among Funds
Use of reserves / 1-time monies
Cost sharing / changes in benefit levels
Fresh Start
Synthetic Fresh Start
Tax-Exempt Exchange
Pension Obligation Bonds
NOTE: These funding solutions require the City to make some form of Additional
Discretionary Payment (ADP) to CalPERS toward the UAL. When making ADPs,
CalPERS requires that each agency identify to which Amortization Base to apply any
additional payments. We will identify the Amortization Bases (i.e., “targeting
strategies”) to help meet these financial objectives.
UFI will refine the most viable financial solutions, perform scenario analyses, and
develop specific recommendations. We will present these recommendations in a
follow-up meeting with staff.
While many clients have asked us about exiting the CalPERS pension system, several
have requested UFI formally assess the opportunity, map the potential pathways and
explain the associated procedural and financial challenges.
As such, we believe UFI is uniquely positioned to lead a public agency throu gh an
understanding and evaluation of the possibility and challenges of leaving the CalPERS
pension system for a “non-qualified plan”, including the following issues:
(1) CalPERS prohibition against split retirement systems or
(2) PEPRA’s prohibition of lower tiers or reduced benefits for Classic
employees
(2) CalPERS costly termination payment requirement and its underlying
financial rationale, and
(3) California Rule requiring public agencies to continue providing a
substantially similar retirement benefit to existing employees.
We can also address how the California Rule’s impact on future hiring decisions to
contain personnel costs. Specifically, the ability to select a candidate based in their
pension status (e.g., Classic or PEPRA) to contain costs for future hires.
Once City staff has provided direction regarding preferred solutions, we will present our
recommendations in a PowerPoint presentation to the City’s Management, Financial
Advisory Committee and City Council.
A-1
Although we can summarize our findings in a formal written report, we have
found that pension material presented in a report format is not as cost -effective
(additional $10,000). Therefore, we will provide a summary of our analysis, key
issues, and recommendations in 3 to 5-page executive summary.
Conducting a workshop is often the best first step or interim step toward the
implementation of financial solutions. UFI can conduct a Board Workshop: 1) to
explain the pension liabilities and 2) to present potential solutions to addre ssing these
costs as well implementation requirements.
UFI will subsequently assist City staff with implementation of the selected action items,
as well as provide follow-up service on an as-needed basis.
UFI will work with City staff to provide specific and detailed recommendations regarding
addressing its retirement costs. We anticipate the City will select more than one
financial strategy. UFI will be available to assist the City in implementing each selected
strategy:
UFI can assist with the issuance of bonds to facilitate tax-exempt exchange;
UFI can help select the Amortization Base to provide optimal savings if the City
makes additional discretionary payments (ADPs);
UFI can review /refine the investment strategy for monies held in the City’s
Section 115 Trust; and
UFI can assist management with labor negotiations - determining the financial
impact of various proposals affecting retirement benefits.
UFI is also available to actively monitor the City’s retirement liability and assist the City
in adjusting its strategies to address the new amortization bases that will arise.
3. IMPLEMENTATION OF FINANCIAL SOLUTIONS AND RECOMMENDATIONS
B-1
Exhibit "B"
SCHEDULE OF SERVICES
Consultant shall provide continued advice and render work product at such time as
needed during the Term of this Agreement.
C-1
Exhibit "C"
COMPENSATION
UFI is willing and prepared to refine, modify and tailor our tasks and work product
to meet the City’s needs and financial parameters. For purposes of generally
estimating costs associated with the work described herein, the following are
estimates based on work completed in recent engagements.
1. Baseline Pension Model - We charge a base rate to develop the pension model of
$10,000 (Pension Model). The baseline pension model can be developed in as little
as 1-2 weeks. We have recommended that the City incorporate OPEB cash flows
into the model in order to develop a full picture of your retirement costs. We
typically request that your OPEB actuary provide pay-go costs schedules (i.e.,
projected retiree medical premiums) to incorporate into our model, in order to keep
costs down, we Incorporating OPEB cash flows will depend on the
responsiveness/availability of pay-go projections from your actuary.
2. Scenario Analysis / Presentations & Meetings - We will discuss potential
solutions, perform scenario (savings) analysis, discuss the benefits (savings) and
risks of each, and finally develop recommended solution (s). This information will be
summarized in 3-5 page executive summary. For this phase, we charge on a time
and materials basis for the costs of running different scenarios, performing additional
analysis, developing/making presentations, and attending meetings. This ensures
that you receive the level of service and analysis that you require. Typically, these
hourly fees range between $12,000 – $15,000.
3. Implementation of Financing Solutions - Assistance with the implementation of
proposed solutions and/or additional services will be addressed in an addendum to
this agreement. Depending on the City’s needs, the pension data can be integrated
into a Financial Planning/Forecasting Model. Implementation of solutions such a
Synthetic Fresh Start or selecting which Amortization bases to select when making
additional payments (ADPs) to CalPERS will be billed on an hourly basis. The
hourly costs for these services are expected to fall between $5,000 – $15,000,
depending on the number and complexity of the proposed solution(s).
If the City decides to issue securities (i.e., tax -exempt exchange or POBs),
such fees will be determined under a separate contract.
Due to variables in every engagement and to ensure City maintains flexibility to tailor
the work to fit within the City’s time and fiscal constraints, UFI proposes to carry out its
work on an actual time and materials basis with the overall costs being governed by the
HOURLY RATES
C-1
financial limits defined by the City, utilizing the following professional service rate
schedule:
UFI Professional Staff Hourly Rates
Chief Executive Officer $350
Managing Director / Director $325
Associate $175
Analyst $125
These rates will remain constant through June 30, 2019 and are subject to change
thereafter. Costs for telephone, e-mail and facsimile expenses, postage and incidental
photocopying are included within the above noted rate schedule. The rate schedule
does not include out-of-pocket and travel expenses that may be incurred during the
work. Out-of-pocket expenses include inter-regional travel, project specific services or
data from third-party vendors (prior approval required), or extraordinary or specifically
requested materials, supplies, printing, or electronic data storage. All out-of-pocket
expenses will be charged on an actual cost basis, plus 10%.
CITY OF ARCADIA
Request for Proposals for
Retirement Benefit Options
June 3, 2018
URBAN FUTURES, INC.
Public Finance Group
Public Management Group
Southern California Office
17821 E. 17th Street, Suite 245
Tustin, CA 92780
Bus: (714) 283-9334
Fax: (714) 283-5465
Northern California Offices
455 Hickey Blvd, Suite 515
Daly City, CA 94015
Bus: (650) 503-1500
1470 Maria Lane, Suite 315
Walnut Creek, CA 94596
Bus: (925) 478-7450
Fax: (925) 478-7697
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C
Hue C. Quach
Director of Administrative Services
City of Arcadia
240 W. Huntington Dr.
Arcadia, CA 91106
Re: Statement of Qualifications for Financial Advisory Services (Urban Futures, Inc.)
Hue,
Urban Futures, Inc. (“UFI”) is pleased to submit this proposal to provide financial advisory services to the City of
Arcadia (the “City”), including evaluating the option to issue Pension Obligation Bonds (POBs). UFI is one of
the State’s leading municipal advisory firms, and our team is highly qualified to provide the City with the highest
level of service. UFI is registered as an Independent Registered Municipal Advisor (IRMA) with the Municipal
Securities Rulemaking Board and the Securities and Exchange Commission.
UFI develops comprehensive solutions and recommendations, tailored to your individual needs. We provide
a solution driven approach to financial advisory services, including capital/project financing plans, budget
forecast modeling, fiscal restructuring and special studies.
UFI is at the forefront of pension and OPEB issues in California. The proposed members of our financing team
have a wealth of experience in local government, public finance and the study of California Public Employee
Retirement System (CalPERS) pension and OPEB plans. We take a comprehensive perspective toward
addressing your retirement costs. We create customized pension models based on CalPERS actuarial data
(amortization bases) and OPEB reports, which enables you to determine the financial impact of different
solutions with accuracy.
The cash flows from our pension model provide the foundation for our scenario analysis. In addition to
developing financial solutions to address your pension liabilities, UFI can analyze and address related
retirement issues for bargaining unit negotiations and budget purposes including: employee cost sharing,
impact of cost of living increase on pension costs, pre-payment strategy, development of pension
stabilization fund, use of reserves, and impact of using different investment strategies (outside 115 Trust).
We will work with staff, City Council, and the Finance Advisory Committee to understand the City’s
parameters and financial objectives in order to evaluate different funding solutions, which include Fresh
Start/ Synthetic Fresh Start, tax-Exempt Exchange, and Pension Obligation Bonds. UFI’s evaluation of
alternative financing options normally involves an extensive cost/benefit analysis that includes consideration
of opportunity costs. These funding options will be summarized, with the attendant benefits/risk in a 3 to 5-
page executive summary.
UFI’s prior pension/OPEB engagements has afforded us with an in-depth understanding of the key legal and
administrative requirements. This insight enables us to explain common questions (by policy-making
boards), such as the ability to leave CalPERS / alternatives to CalPERS. We believe that the rising retirement
costs is likely the most significant financial issue that staff and policy makers will face in their lifetime. The
solutions often involve difficult decisions, and above-all require long-term financial discipline. Therefore,
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we will attend all necessary board workshops, Finance Advisory Committee meetings, to ensure that all
stakeholders understand the issues and proposed solutions.
I look forward to the opportunity to discuss our proposal further and to introduce the UFI team. Should you
have any questions, or need additional information, please feel free to ask.
Sincerely,
Michael P. Busch
Chief Executive Officer
UFI Financial Solutions
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Qualifications of the Firm
FIRM OVERVIEW: Urban Futures Incorporated, “UFI” provides municipal advisory services to cities, counties,
special districts, schools, community colleges, and non-profits in the State of California.
UFI is registered as an Independent Registered Municipal Advisor (IRMA) with the Municipal Securities Rulemaking
Board (MSRB) and the Securities and Exchange Commission (SEC). All UFI’s senior level financial advisory
professionals have passed the MSRB Series 50 Municipal Advisor Representative examination.
We have a Duty of Care in the advice that we provide to all our clients and a Duty of Loyalty to provide advice
that is in the Best Interests of our clients.
FIRM STRUCTURE: Currently UFI has 20 professionals located in the Firm’s Northern and Southern California
offices. 12 advisors provide traditional municipal and school financing and management services, and 2 provide
continuing disclosure, reinvestment, and arbitrage rebate services. The firm is wholly owned by Michael Busch,
its President & CEO.
UFI is structured with four divisions:
The Public Management Group offers strategic planning, financial and budget forecasting, special studies,
and performance improvement services. This groups develops customized pension/OPEB and long-range
financial planning models.
The Public Finance Group supports the issuance of debt including lease revenue bonds, certificates of
participation, general obligation bonds, pension obligation bonds, special tax and benefit assessment
bonds, tax allocation bonds, water and sanitary sewer revenue bonds, privately placed loans, and clean
energy bonds
Analytics and Compliance provides services related to continuing disclosure, arbitrage rebate, and
California Debt and Investment Advisory Commission (CDIAC) reporting compliance.
The Sustainable Communities Development Group provides economic development and real estate
advisory services, including Redevelopment wind down and the formation of Community Facilities
Districts (CFDs), Assessment Districts and Enhanced Infrastructure Financing Districts (EIFD’s).
LEAD FINANCIAL ADVISOR: Urban Futures has
been a leader in providing financial advisory
services since 1972. We have assisted over 450
public agencies with bond financing and other
capital issues.
In 2017 & 2018, we executed 145 transactions
totaling more $2.6 billion in par value each year,
earning us the #1 ranking in California, by
number of transactions.
This statistic further highlights our focus on
serving the needs of small and medium-sized municipalities. It also indicates we are in the market nearly 3 times
per week and maintain an understanding of current market trends and requirements.
-4-
COMMITMENT TO CALIFORNIA: UFI’s offices and employees are all located
in California, having established its first office in Orange County in 1972. Our
California clients have put their trust in UFI over its 45-year history. UFI has
served nearly half the 88 cities in Los Angeles County.
WHAT SETS US APART: We are not a transaction-oriented firm. UFI seeks to
develop comprehensive long-term solutions. While most municipal advisory
firms rely upon the issuance of bonds, UFI is structured to craft public finance
solutions that best meet our client’s financial objectives and policy
constraints, which may not include the issuance of bonds.
Practical Solutions - We help you formulate practical solutions and
recommendations and present them to your authorizing board. We work in
conjunction with each client through the budgeting and planning phases. We
develop a decision framework and models that incorporate key variables;
taking into account cost/benefits and policy considerations to evaluate all
viable project and financing alternatives.
Senior-Level Personnel with Executive Government Experience - Staffed
with former city managers, chief financial officers, legal counsel and public
finance investment bankers, UFI combines the practical aspects of public
financial management with the technical expertise necessary to provide the
highest level of financial advisory services within the public policy and fiscal
context of your agency.. The assigned team has over 75 years of combined experience, including executive and
leadership positions in local government, helping ensure we develop proven solutions and recommendations that
can implemented within your policy context..
SERVICES WE OFFER: We provide solutions for all aspects of public finance-related issues—from strategic
planning, analysis and evaluation of alternatives, to transaction (financing) execution, post-issuance compliance,
fiscal restructuring and specific contemporary issues such as the skyrocketing costs of municipal pension and other
post-employment unfunded obligations (OPEB).
Our core expertise is in public finance, financial solutions, and financial modeling, which by necessity involves
the integration of public agency retirement and benefit costs.
In 2017, UFI created the Pension Focus Group to assist public agencies with the study and implementation of
efficient pension management strategies. UFI develops customized pension and OPEB models, based on your
specific actuarial data, which sets UFI apart from our competitors. The model enables UFI to analyze the impact
of potential alternatives with greater precision and develop optimized solutions.
Experience with Pension Advisory Services
PENSION MODELING EXPERIENCE: Over the past several years, UFI has spent hundreds of hours understanding
the intricacies of California pension benefit laws, CalPERS administrative procedures, and developing complex
pension/OPEB models. This expertise serves as the foundation for our customized pension models. The result is
an in-depth understanding of how your pension liabilities are structured, the key drivers, and the practical
solutions and strategies to address them.
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We commence our services by developing an amortization schedule that includes each Amortization Base, which
provides the City a level of detail not previously available. Since the City’s retirement costs are based on its
underlying payroll, which is the central component of the City’s operating budget, your retirement costs cannot
be viewed independently. Therefore, we typically incorporate other obligations such as other post-employment
benefits (OPEB costs), existing debt service, and capital improvement costs into our pension models and analysis
to address your fixed cost liabilities in a comprehensive manner.
UFI uses data from actuarial reports to develops pension cash flows and payments schedules, our focus is on
determining the budgetary cash flow impact on the City – not GASB 68 reporting.
We believe your pension liabilities are large-scale, complex issues that involve multiple, inter-related variables;
consequently, addressing these issues will require creative solutions from multiple funding sources. Moreover,
public pension liabilities (defined benefit plans) are dynamic and ever-changing, which will require the City to
monitor and (pro)actively manage its pension liability going-forward.
UFI is currently serving engagements to provide pension and OPEB modeling services for the following municipal
agencies:
City of Glendora –The City of Glendora hired UFI through a competitive RFP
process to develop a pension model to help determine the size of their UAL to
pre-pay, and to execute a Pension Obligation Bond. The City has completed the
analysis phase and validation proceedings; and, is scheduled to issue POBs in
June/July.
Additionally, the finance director requested that UFI develop a financial forecasting model that incorporates the
cash flows from to pension/OPEB model. The financial forecasting model is intended to be used with the City
Council to prioritize /designate the use of additional revenues expected to be generated from their newly passed
.75 cent sale tax measure.
City of Simi Valley – The City of Simi Valley selected UFI though a competitive RFP
process issued for pension/OPEB modeling and financial advisory services. to help
the City evaluate and implement various financial solutions to their rising
retirement costs. The City has completed the analysis phase and is commencing
validation proceedings to issue POBs.
Rowland Water District - UFI developed a pension model that included 14
individual amortization schedules as well as pay-go cost projections for the
District’s retiree medical costs. The model was designed to help the District
understand and address its outstanding $4.4 million CalPERS liability and $3.6
million retiree medical (OPEB) liability. Elements of the pension/OPEB model are
expected to be integrated into the District’s existing rate model at which time we
will evaluate potential financial solutions, including the use of tax-exempt
exchange and synthetic Fresh Start.
City of Glendora
June Overholt
Finance Director
(626) 457-1800
joverholt@ci.glendora.ca.us
City of Simi Valley
Samantha Agrabrite
Deputy City Manager
(626) 457-1800
sagrabrite@simivalley.org
Rowland Water District
Tom Coleman
General Manager
(818) 898-7307
tcoleman@rowlandwater.c
om sfcity.org
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City of San Fernando - The City of San Fernando issued an RFP for pension/OPEB
modeling and financial advisory services. UFI was selected among several firms,
via competitive RFP process, to help the City evaluate and implement various
financial solutions to their rising retirement costs. The City of San Fernando is
one of 23 agencies in California that have a voter-approved pension override tax.
City of Desert Hot Springs - UFI prepared a long-term financial forecast for the
City in 2017, which included an analysis of the City’s pensions liabilities and costs.
The City additionally requested UFI present to the City a special report explaining
the CalPERS retirement system to the City Council and the impacts associated
with the City’s current and projected pension costs.
SGVCOG – UFI was hired by the San Gabriel Valley Council of Governments
(SGVCOG) to help them model their future retirement costs, including potential
alternatives to CalPERS such as 401(a), PARS, as well as exiting the CalPERS system
(i.e., termination). We developed a customized model, driven by individual
employee data (salaries), to estimate termination payments to CalPERS using
different discount rates.
UFI has also recently commenced pension and OPEB modeling engagements with:
City of Culver City
South Orange County Wastewater Authority
Mid-Peninsula Water District
PENSION OBLIGATION BONDS: California cities face growing pension unfunded accrued actuarial liabilities
(UAALs) that are consuming an ever-increasing share of their General Fund revenues. As a result, UFI is seeing a
renewed interest in Pension Obligation Bonds (“POBs”). POBs are designed to finance a city’s UAL by pre -paying
a sizeable amount of its long-term pension liability in a lump sum, under the assumption that CalPERS invest the
POB proceeds at rates substantially higher than the City’s cost of borrowing. financing.
Since 2015, UFI has completed eight POBs for the cities of Fountain Valley, Inglewood, Monrovia, Pasadena,
Pomona, Riverside, San Ramon and the Cosumnes Community Services District. Below is a summary for several
of these engagements:
City of Fountain Valley - UFI’s municipal advisory work with the City of Fountain
Valley included the issuance of Pension Obligation Bonds in 2015 to fund part of
the City’s This engagement commenced with an in-depth analysis of the impact of
advanced payments to CalPERS. We issued a $16 million in POBs in 2015, to fund
% of its Unfunded Actuarial Accrued Liability (UAAL).
City of Fountain Valley
David Cain
Finance Director (retired)
(714) 270-6840
davidcain.govfinance@
gmail.com
San Gabriel Valley
Council of Governments
Marisa Creter
Executive Director
(626) 457-1800
mcreder@sgvcog.org
City of San Fernando
Nick Kimball
City Manager
(818) 898-7307
nkimball@sfcity.org
Desert Hot Springs
Chuck Maynard
City Manager
(760) 329-6411
citymanager@cityofdhs.org
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City of Inglewood - Last year UFI completed a second issuance of POBs for the City
Inglewood, to refund the City’s 2005 POBs. We performed an analysis that
determined it was more cost-effective to cash defease the maturities than to pay
the make-whole call. A portion of the proceeds reimbursed the City’s for its
current year CalPERS contributions, which were then used to pay for public
infrastructure improvements in areas surrounding the new NFL Stadium.
City of Monrovia – Last year UFI served as the Municipal Advisor to the City of
Monrovia. We performed in-depth analysis for the issuance of $115,305,000 of
Refunding POBs. Proceeds from the POBs were used to refund in full amount of
the City of Monrovia’s Series 2010 POBs and fund a portion of the City’s new UAAL.
The City currently has a fully funded pension plan, and only pays its annual normal
costs.
City of Riverside – UFI served as the Municipal Advisor to the City of Riverside,
assisting in the issuance of $31,960,000 of POBs. The 10-year taxable bonds were
issued to pay off the Pension Notes issued in 2016, which paid off a portion of the
City’s unfunded actuarial accrued liability (UAAL). The 2017 bonds were issued on
a parity basis with the City’s $89 million Series 2004A and $30 million Series 2005A
Taxable Pension Bonds.
City of Pasadena – UFI serves as the Municipal Advisor to the City of Pasadena. In
2015, we assisted in the issuance of $119,460,000 in POBs (Series A & B) to
refinance its outstanding 1999, 2004, and 2013 POBs, as well as to fund a portion
of its unfunded actuarial accrued liability of the (closed) Fire and Police Retirement
System.
City of Pomona –In 2017 UFI we assisted the City of Pomona Public Finance
Authority with the issuance of taxable lease revenue refunding bonds totaling
$50.4 million in par value. The proceeds for this transaction were effectively used
to refinance the $42 million 2006 POBs. The bonds were structured as a lease
transaction, which required a pledged of essential assets, in order to obtain AA
bond insurance.
City of Inglewood
Sharon Koike
Assistant Finance Director
(310) 412-8724
skoike@
cityofinglewood.org
City of Monrovia
Oliver Chi
City Manager
(626) 932-5512
ochi@ci.monrovia.ca.us
City of Riverside
Adam Raymond
Chief Financial Officer
(Current Glendora CM)
(626) 914-8201
araymond@
ci.glendora.ca.us
City of Pasadena
Matthew Hawkesworth
Finance Director
(626) 744-4355
mhawkesworth@
cityofpasadena.net
City of Pomona
Onyx Jones
(currently Culver City FD)
Finance Director
(909) 620-2353
onyx_jones@
ci.pomona.ca.us
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Scope of Services
The focus of our engagement will be on addressing your retirement costs, which will be comprised of three
integrated and successive phases:
1. Develop a pension model based on your CalPERS Unfunded Accrued Liabilities (UAL).
2. Develop financial solutions to help address your pension liabilities
3. Assist in implementing and executing the financial solutions
We will assist staff with analysis and decision-making relating to the City’s pension and related financial issues, as
well as serve on as-needed and as-requested basis to assist the City on other finance and budget-related matters.
We commence by building a customized pension model, based on the City’s Amortization Bases - 19 for the
Miscellaneous Plan and 17 for the Safety Plan. We develop a model that corresponds to the UAL for the 1st Tier
“Classic” plan because a significant majority (98%) of the UAL is concentrated in the 1st Tier or Classic Plans. Several
of the City’s key pension factors are summarized below:
UAL is equal to $142 million: $45 million Miscellaneous and $96 for the Safety Plan.
Annual UAL payments (FY 19-20) are equal to $10 million, UAL payments increase steadily each year.
Annual UAL payments peak in 2031 ($14.8 million) – a 68% increase from FY 19-20 levels.
Annual normal costs are equal to approximately $6.7 million.
Total CalPERS combined pension payments (Normal + UAL) for FY 19-20 are equal to $17 million
We the use the data from CalPERS’ actuarial reports (amortization bases, schedules, and assumptions) as the basis
for our pension model. CalPERS provides a sensitivity analysis within each report to provide an indication of the
impact of change in investment performance and/or discount rate on the UAL.
As we have done with other municipal clients, we are comfortable using CalPERS actuarial data to perform
scenario/sensitivity analysis in order to be cost-effective. If the City would like to determine the impact of
using different assumptions other than those in CalPERS’ actuarial report, we can help the City select an
actuarial firm to perform the calculations.
The cash flows from our pension model provide the foundation for our scenario analysis. In addition to developing
financial solutions to address your pension liabilities, UFI can analyze and address related retirement issues for
bargaining unit negotiations and budget purposes including:
Employee Cost Sharing
Impact of cost of living increase on pension costs
Pre-payment strategy
Development of pension stabilization fund
Use of reserves
Impact of using different investment strategies (outside 115 Trust)
Once the model is developed and data is analyzed, UFI will hold an in-person meeting to present basic findings
and discuss potential financial solutions to the City Manager and Finance Director. We will commence this process
1. CALPERS UAL PENSION ANALYSIS & MODELING
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by determining the City’s financial objectives: 1) maximize budgetary / cash flow relief or 2) maximize total UAL
payment savings.
OPEB - The City has taken steps to limit its OPEB benefits paid to employees hired after January 1, 2012,
which has helped to limit its OPEB liability. The City has also established and made contributions into an
OPEB 115 Trust. Although these are steps in the right direction, the City’s Net OPEB Liability is more than
$17 million, which is just over 11% funded.
Although the requested scope for services for this engagement is intended to cover just pension liabilities,
UFI strongly encourages the City to include OPEB funding costs as part of its retirement costs projections.
We you suggest you obtain long-term “pay-go” cost projections from your OPEB actuary, in order to
incorporate the expected “pay-go” retiree medical premiums into our retirement costs projections. With
this information, UFI can work with the City to assess potential OPEB cost saving strategies.
The results from the model and scenario analysis can simply be incorporated into your existing long-range financial
planning model.
In developing potential financial solutions and recommendations, UFI takes a comprehensive perspective of the
City’s financial position. Our solutions take into consideration all the City’s major long-term financial obligations,
including:
UAL + Normal Costs
OPEB
Debt Service on Long-term bonds
Capital Improvement Plan (CIP)
Projected Salary and Rate Increases
After our initial analysis and findings presentation, we obtain feedback from City staff (and Finance Committee)
regarding the most viable financial solutions. Specifically, we will discuss minimum required annual payments and
how to best apply Additional Discretionary Payments (ADPs) or “pre-payments”. We will discuss the financial
impact as well as the benefits and risks of various funding solutions, including:
Cost Allocation among Funds
Use of reserves / 1-time monies
Cost sharing / changes in benefit levels
Fresh Start
Synthetic Fresh Start
Tax-Exempt Exchange
Pension Obligation Bonds
NOTE: These funding solutions require the City to make some form of Additional Discretionary Payment (ADP)
to CalPERS toward the UAL. When making ADPs, CalPERS requires that each agency identify to which
Amortization Base to apply any additional payments. We will identify the Amortization Bases (i.e., “targeting
strategies”) to help meet these financial objectives.
UFI will refine the most viable financial solutions, perform scenario analyses, and develop specific
2. DEVELOP FINANCIAL SOLUTIONS AND RECOMMENDATIONS
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recommendations. We will present these recommendations in a follow-up meeting with staff.
While many clients have asked us about exiting the CalPERS pension system, several have requested UFI formally
assess the opportunity, map the potential pathways and explain the associated procedural and financial
challenges.
As such, we believe UFI is uniquely positioned to lead a public agency through an understanding and evaluation
of the possibility and challenges of leaving the CalPERS pension system for a “non-qualified plan”, including the
following issues:
(1) CalPERS prohibition against split retirement systems or
(2) PEPRA’s prohibition of lower tiers or reduced benefits for Classic employees
(2) CalPERS costly termination payment requirement and its underlying financial rationale, and
(3) California Rule requiring public agencies to continue providing a substantially similar
retirement benefit to existing employees.
We can also address how the California Rule’s impact on future hiring decisions to contain personnel costs.
Specifically, the ability to select a candidate based in their pension status (e.g., Classic or PEPRA) to contain costs
for future hires.
Once City staff has provided direction regarding preferred solutions, we will present our recommendations in a
PowerPoint presentation to the City’s Management, Financial Advisory Committee and City Council.
Although we can summarize our findings in a formal written report, we have found that pension material
presented in a report format is not as cost-effective (additional $10,000). Therefore, we will provide a
summary of our analysis, key issues, and recommendations in 3 to 5-page executive summary.
Conducting a workshop is often the best first step or interim step toward the implementation of financial
solutions. UFI can conduct a Board Workshop: 1) to explain the pension liabilities and 2) to present potential
solutions to addressing these costs as well implementation requirements.
UFI will subsequently assist City staff with implementation of the selected action items, as well as provide follow-
up service on an as-needed basis.
UFI will work with City staff to provide specific and detailed recommendations regarding addressing its retirement
costs. We anticipate the City will select more than one financial strategy. UFI will be available to assist the City
in implementing each selected strategy:
UFI can assist with the issuance of bonds to facilitate tax-exempt exchange;
UFI can help select the Amortization Base to provide optimal savings if the City makes additional
discretionary payments (ADPs);
UFI can review /refine the investment strategy for monies held in the City’s Section 115 Trust; and
UFI can assist management with labor negotiations - determining the financial impact of various proposals
affecting retirement benefits.
UFI is also available to actively monitor the City’s retirement liability and assist the City in adjusting its strategies
to address the new amortization bases that will arise.
3. IMPLEMENTATION OF FINANCIAL SOLUTIONS AND RECOMMENDATIONS
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Methodology
To gain an in-depth understanding of the City’s pension liabilities and consequently create custom-tailored
solutions that optimize savings, UFI follows a precise and systematic process to address your pension liabilities.
We have summarized our process in the following 8-step methodology:
1. Develop Amortization Schedules & Model
We commence by creating an individual amortization schedule for each amortization base. The individual
amortization schedules serve as the foundation of the pension cash flow model. Only UFI delves into this level of
detail, which we believe is most critical to understand which cash flows to target.
One of UFI’s core competencies is financial modeling. Your pension
model will be custom-tailored to this project and your needs, it will
be flexible and user-friendly – we do not use canned software or a
standard model.
The primary focus of the model is be able to precisely determine
the cash flow impact of different solutions. In addition to UAL
amortization payments, the model can also incorporate additional
cash flow/budget constraints such as bond debt service, payroll
costs, and/or OPEB payments.
2. Review Financial Resources
The basic answer to reducing pension liabilities is simple and
straightforward: either accelerate payments and/or make
additional payments (i.e., prep-payments). But the right strategy
for each public agency typically requires a combination of
innovative, complex and tailored solutions. To this end, UFI will
first examine potential funding sources:
Available Reserves
One-time revenues - sale of surplus property/assets
Pro-rata allocation to Enterprise Funds & Grant Fund Programs
Successor Agency Repayment Agreement
Reallocation of future Bond Debt Service/Savings
Pension Obligation Bonds
We will also evaluate the City’s other major financial constraints, including:
Available Unallocated General Fund Reserves and Annual Budget Revenues
Major Capital Projects
Future Funding Commitments
Unfunded Mandates
Pending Litigation
Since pension costs impact nearly every facet of the City’s operations, the solution will likely include a combination
of different funding sources, and consequently, require comprehensive and well-integrated solutions.
Approach to Addressing Pension Liability
1. Develop Model + Amortization
Schedules
2. Review financial resources
3. Determine objectives: cash flow
restructuring and/or maximize savings
4. Assess the financial viability of each
alternative
5. Determine the optimal solution that
works in your environment
6. Present Options & Recommendations
to Staff, Public and Authorizing Board
7. Execute transaction / assist in
implementation of recommendations
8. Follow-up & monitoring
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3. Determine objectives: cash flow restructuring and/or maximize savings
The City’s UAL payments are scheduled to steadily increase from $10 million to $14 million or 40% over the next
10 years. Meeting this challenge could be further exacerbated by a market downturn or a recession, which would
impact both the City’s revenue base and increase its UAL payments.
CalPERS has noted that the most effective way to reduce your payments is to make up-front payments or pre-pay
a portion of your UAL. Accordingly, there are two primary objectives in applying up-front monies or pre-payments:
maximize cash flow impact or minimize total UAL payment.
1) Maximize Budget Relief - To provide budget relief from anticipated increases in future payments,
available monies should be considered as a potential “advanced payment” to reduce the current UAL
and to reduce future payments by targeting the Amortization Bases with shorter amortization periods
(under 10 years).
2) Maximize Savings - If the City is seeking to maximize interest savings or reduce its total payments,
then it should seek to pre-pay amortization Bases with longer-term amortization schedules (e.g., 20-
30 years). For example, a $1.0 million Amortization Base with a 30-year amortization will require the
City to make $2.5million in total payments.
Although these objectives are not mutually exclusive, ultimately, each decision will seek to maximize one or the
other. Furthermore, your “solution” may have other key constraints, such as wrapping additional cash flow
payments around existing debt service payments.
UFI generally advises municipalities to apply POBs/Fresh Start monies toward short-term amortization schedules,
to minimize total interest costs; and to apply up-front monies toward longer-term amortization bases, to maximize
total interest cost savings.
4. Evaluate Financial Viability of Each Alternative Solution
Once all the cash flows, funding sources, and solution parameters have been established, the creative problem-
solving process commences. Your customized pension model will comparatively evaluate various solutions,
incorporate financial constraints (e.g., debt service or cash flows), as well as account for changes to key
assumptions, variables, and drivers in the model.
UFI determines the savings applicable to each alternative and compare the cost-effectiveness of each potential
solution. Finally, we summarize our findings in simple and clear presentation and charts, typically an Excel and
PowerPoint format.
5. Determine the Optimal Solution that Works in your Environment
UFI’s professionals not only have extensive finance experience but also have prior high-level government
management experience. We believe that this experience enables our principals to develop creative and practical
solutions that work in your fiscal and political environment. Although some financial solutions may appear
optimal, they may not work in your policy context. Therefore, our final recommendations will not only solve your
financial needs but also be acceptable to your City Council.
-13-
6. Present Options & Recommendations to Staff, Public and Authorizing Board
Once final recommendations have been determined, we will assist you in preparing staff reports and present our
findings and recommendations to your City Council. We are also available to make presentations to the pubic or
special Ad Hoc committees as well.
7. Execute Transaction & Assist in Implementation of Recommendation
UFI believes the critical work commences at the planning and evaluation stages. Our goal, always, is to provide
a seamless execution of each transaction and to serve as an extension of staff and to provide capacity where
needed.
If one of the recommendations is to issue POBs, UFI will assist you in every step of the transaction execution –
until closing. We will help to assemble the financing team, assess financing alternatives, and ensure the City
selects the optimal structure. Our professional staff will ensure each task/transaction is executed in a timely
and cost-effective manner.
8. Follow-Up & Monitoring
As financial advisors, we are not transaction-oriented, but rather our focus is in providing viable long-term
solutions. Given recent pension plan changes achieved through pension reform, and recent CalPERS Board policy
changes, we believe pension plans can be actively managed by member agencies. The very fact that each year
CalPERS adds a new amortization base to take into account market/value (gains) & losses, necessitates this level
of diligence. UFI will provide regular follow-up to review your funding status and update you on recent market
developments.
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Project Team
We have assigned our three most senior staff to your project. Collectively, we have over 75 years of combined
executive-level government and public finance experience, including financial forecast modeling, capital project
financing, fiscal sustainability strategies and restructurings, pension (and OPEB) analytics and management, and
pension obligations bonds. We have helped cities, water agencies, and specials districts complete hundreds of
capital project financings, explained complex fiscal and analytic concepts to elected officials, and gained the trust
and respect of numerous councils and boards. More importantly, all our work, findings and recommendations
are tailored to our client’s financial needs and objectives.
Michael Busch will be the engagement manager and day-to-day contact. Julio Morales will develop the pension
model, perform requested analytics, and also attend meetings and presentations. Jim Morris is the other member
of our Pension Team, who may assist on various tasks and shall be available to attend meetings or Board
Presentation in the event of unforeseen scheduling conflicts.
Below are the biographies and relevant experience of the proposed members of the consulting team for this project
based out of our Tustin office. This team will be available to serve the City and meet with your staff as often as
requested.
Michael P. Busch, CEO/President
17821 East 17th Street, Suite 245, Tustin, CA 92780
(714) 316-6150; michaelb@urbanfuturesinc.com
Michael will have overall responsibility for delivery of all our services to the City,
including project oversight and coordination of services to the City.
Michael Busch is the firm owner and serves as the Chief Executive Officer managing day-to-
day operations. Prior to joining UFI in 2007, Michael served several Southern California public agencies as an
Assistant and Deputy City Manager and Chief Financial Officer. He is a registered financial advisor with over $2
billion in tax-exempt debt transactions for municipalities and local governments over the last 11-years. Michael
utilizes his experience in the areas of municipal finance and management to assist client agencies with the
successful development and implementation of fiscal restructuring, forecasting, capital planning and debt
management.
Michael earned a Bachelor of Arts Degree from California State Polytechnic University Pomona in Urban and
Regional Planning. In addition, he holds a Master of Arts Degree in Public Administration from California State
University Long Beach with an emphasis in public finance and public works.
Julio F. Morales, Director
17821 East 17th Street, Suite 245, Tustin, CA 92780
(714) 283-9334; juliom@urbanfuturesinc.com
Julio will servs as the day-to-day advisor for this assignment. He will be responsible for
developing pension cost models with detailed amortization schedules necessary to
evaluate various financial alternatives and recommended solutions.
Julio has over twenty-five years of working in the areas of public and corporate finance, city management,
municipal budgeting and financial leadership. He served as the City Manager for the City of Huntington Park;
-15-
having also served at its Finance Director and Treasurer. In both roles Julio helped implement changes and
improvements that led to the elimination of a $4.0 million (15%) structural deficit. He also served as the Finance
Director and Treasurer for the City of El Monte. Most recently, Julio worked for the Department of the Treasury’s
Office of Technical Assistance (OTA), providing financial advice to the Treasurer of Paraguay and helping to
streamline and automate their operations. Julio began his career in public and corporate finance as an investment
banker with Bank of America, and derivative/ investment provider for Transamerica, then subsequently served as
the debt manager for the City of Oakland and a financial advisor at Fieldman-Rolapp and PFM.
Julio earned his undergraduate degree from the University of Michigan, a Master of Public Policy (MPP) from the
Harvard Kennedy School of Government, and an MBA from UCLA, where he was a Dean’s Fellowship Recipient.
James P. Morris, Managing Director
17821 East 17th Street, Suite 245, Tustin, CA 92780
(909) 648-3176; jamesm@urbanfuturesinc.com
Jim will coordinate the resources of our Public Management Group team, ensuring
comprehensive data collection, thorough analytics, and actionable recommendations.
Jim has more than twenty years of experience working in the fields of public policy,
financial analysis, municipal law and public agency governance. Jim utilizes his diverse background and expertise
in local government to assist cities and special districts in the areas of long-term forecasting, fiscal stabilization
and financial sustainability. His recent engagements include preparing fiscal forecasts for Pomona, Beaumont and
various municipal utilities, conducting program evaluation services in Pasadena, and developing general fund
reimbursement models in Azusa, Needles and Pomona. Jim began his professional career as a public law attorney
with the County of San Bernardino and Best Best & Krieger LLP, where for over a decade he helped government
agencies successfully navigate legal complexities affecting their organizations and operations.
Jim is a graduate of Dartmouth College, and received both his Juris Doctorate and Master’s in Urban Planning from
UCLA.
Use of Subcontractor(s) - UFI anticipates the proposed scope of work will be performed by the above-identified
UFI staff. If the scope of work, however, should necessitate actuarial services or expert legal advice, UFI reserves
the option to subcontract with an expert in their respective field, based upon recommendation of UFI and
approval of the City.
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Proposed Fees
UFI is willing and prepared to refine, modify and tailor our tasks and work product to meet the City’s needs and
financial parameters. For purposes of generally estimating costs associated with the work described herein, the
following are estimates based on work completed in recent engagements.
1. Baseline Pension Model - We charge a base rate to develop the pension model of $10,000 (Pension Model).
The baseline pension model can be developed in as little as 1-2 weeks. We have recommended that the City
incorporate OPEB cash flows into the model in order to develop a full picture of your retirement costs. We
typically request that your OPEB actuary provide pay-go costs schedules (i.e., projected retiree medical
premiums) to incorporate into our model, in order to keep costs down, we Incorporating OPEB cash flows
will depend on the responsiveness/availability of pay-go projections from your actuary.
2. Scenario Analysis / Presentations & Meetings - We will discuss potential solutions, perform scenario (savings)
analysis, discuss the benefits (savings) and risks of each, and finally develop recommended solution (s). This
information will be summarized in 3-5 page executive summary. For this phase, we charge on a time and
materials basis for the costs of running different scenarios, performing additional analysis, developing/making
presentations, and attending meetings. This ensures that you receive the level of service and analysis that
you require. Typically, these hourly fees range between $12,000 – $15,000.
3. Implementation of Financing Solutions - Assistance with the implementation of proposed solutions and/or
additional services will be addressed in an addendum to this agreement. Depending on the City’s needs, the
pension data can be integrated into a Financial Planning/Forecasting Model. Implementation of solutions
such a Synthetic Fresh Start or selecting which Amortization bases to select when making additional payments
(ADPs) to CalPERS will be billed on an hourly basis. The hourly costs for these services are expected to fall
between $5,000 – $15,000, depending on the number and complexity of the proposed solution(s).
If the City decides to issue securities (i.e., tax-exempt exchange or POBs), such fees will be determined
under a separate contract.
Due to variables in every engagement and to ensure City maintains flexibility to tailor the work to fit within the
City’s time and fiscal constraints, UFI proposes to carry out its work on an actual time and materials basis with the
overall costs being governed by the financial limits defined by the City, utilizing the following professional service
rate schedule:
UFI Professional Staff Hourly Rates
Chief Executive Officer ........................................................................................................................... $350
Managing Director / Director ................................................................................................................ $325
Associate ................................................................................................................................................ $175
Analyst ................................................................................................................................................... $125
These rates will remain constant through June 30, 2019 and are subject to change thereafter. Costs for telephone, e -mail and facsimile
expenses, postage and incidental photocopying are included within the above noted rate schedule. The rate schedule does not include
out-of-pocket and travel expenses that may be incurred during the work. Out-of-pocket expenses include inter-regional travel, project
specific services or data from third-party vendors (prior approval required), or extraordinary or specifically requested materials, supplies,
printing, or electronic data storage. All out-of-pocket expenses will be charged on an actual cost basis, plus 10%.
HOURLY RATES