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PROFESSIONAL SERVICES AGREEMENT REGARDING
FINANCIAL ADVISORY SERVICES
1. PARTIES AND DATE.
This Agreement is made and entered into this,4) hday of., 0/0 , 2019,
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 CaIPERS
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 for 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, Consultant
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, the
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 Agreement 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 provisions 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 arising 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 Consultant 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 underlying 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 exercise 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 protection 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 shoring, 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. The 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 CaIPERS 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 UPI 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, "Extra 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 compensated 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 pursuant 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 specifying 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 entitled 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 Consultant 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 method 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 Services 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 restricted 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.
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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.
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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 other 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
12
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
13
in witness whereof the Parties have executed this Professional Services Agreement
on the date set forth below
CITY OF ARCADIA URBAN FUTURES, INC.
By
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City ktManager c (86
Date: cT ZS . \cl rint Name and Title /
Date: Clif 2- 1 IC.
ATTEST: - -77
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APPROVE D AS C.‘ F. R',,i1 IC 44VZ. ev4 f cLA.42---
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rint Name pnd Title
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, ' Date:_ 11_11,1 li _
Stirs. - :,Itt..cf)
City Atzormv CONCUR:
Administrative Services Director
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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 g
Dominic Lazzaretto ign ture
City Manager
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Date: I5rint Name and Title
Date: 9 12- h*
ATTEST:
OF
By if '
City Clerk i nature
APPROVED AS TO FORM:
rint Name nd Title
Date: 7 2) 1 II
Stephen P. Deitsch
City Attorney CONCUR:
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Administrative Services Director
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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 CaIPERS 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.
1. CALPERS UAL PENSION ANALYSIS& MODELING
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 CaIPERS combined pension payments (Normal + UAL) for FY 19-20 are
equal to $17 million
We use the data from CaIPERS' actuarial reports (amortization bases, schedules, and
assumptions) as the basis for our pension model. CaIPERS 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
CaIPERS 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 CaIPERS' actuarial report, we can help the City
select an actuarial firm to perform the calculations.
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.
2. DEVELOP FINANCIAL SOLUTIONS AND RECOMMENDATIONS
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
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 CaIPERS toward the UAL. When making ADPs,
CaIPERS 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 CaIPERS 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 CaIPERS
pension system for a "non-qualified plan", including the following issues:
(1) CaIPERS prohibition against split retirement systems or
(2) PEPRA's prohibition of lower tiers or reduced benefits for Classic
employees
(2) CaIPERS 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 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.
3. IMPLEMENTATION OF FINANCIAL SOLUTIONS AND RECOMMENDATIONS
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.
A-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.
B-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 CaIPERS 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.
HOURLY RATES
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
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%.
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