HomeMy WebLinkAboutH. J. Umbaugh & Associates (2)
H..J.Umbaugi, l\ssociatBs
8365 Keystone Ul Suite 300
P. O. Box 40458
Phone:
Fax: 317-465-1550
Wnbsite: w\'<Jw.hju.com
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January 19, 2007
City of Jeffersonville Board of Public Works
c/o Mr. Leslie D. Merkley, Esq.
500 Quartermaster Court
Jeffersonville, Indiana 47130
Re: Gaming Related Studies
Dear Mr. Merkley:
You have requested that H.J. Umbaugh & Associates, Certified Public Accountants, LLP
(the "Firm" or "Umbaugh") provide to the City of Jeffersonville Board of Public Works (the
"'Client" or the "City") those services more fully set forth in Exhibit A hereto (the "Services").
Fees and Costs.
Fees charged for work performed are generally based on hourly rates for the time
expended, a fixed amount or other arrangement as mutually agreed upon as more appropriate for
a particular matter. Hourly rates for work performed by our professionals vary by individual and
reflect the complexity of the engagement.
In addition to fees, we also charge for various ancillary services, for which you will be
invoiced. Such charges may include long distance telephone charges, photocopying, facsimile
transmission, computer research, mileage, travel expenses and other similar charges specifically
applicable to the engagement.
Billing Procedures.
Normally, you will receive a monthly statement showing fees and costs incurred in the
prior month. Occasionally, we may bill on a less frequent basis if the time involved in the prior
month was minimal or if arrangements are made for the payment of fees from bond proceeds.
The account balance is due and payable on receipt of the statement and we reserve the right to
charge 1 % interest per month for outstanding unpaid balances over thirty (30) days from the date
of billing. Once our representation has been concluded or terminated, a final billing will be sent
to you. If requested to provide an estimate of our fees for a given matter, we will endeavor in
good faith to provide our best estimate, but unless there is a mutual agreement to a fixed fee, the
actual fees incurred on any project may be less than or exceed the estimate. Any questions or
errors in any fee statement should be brought to our attention in writing within sixty (60) days of
the billing date.
City of Jeffersonville Board of Public Works
c/o Mr. Leslie D. Merkley, Esq.
Re: Gaming Related Studies
January 19, 2007
Page Two
Termination.
Both the Client and the Firm have the right to terminate the engagement at any time after
reasonable advance written notice. On termination, all fees and charges incurred prior to
termination shall be paid promptly.
Accountants' Opinion.
In performing our engagement, we will be relying on the accuracy and reliability of
information provided by Client personnel. We will not audit, review, or examine the
information. Please also note that our engagement cannot be relied on to disclose errors, fraud,
or other illegal acts that may exist. However, we will inform you of any material errors and any
evidence or information that comes to our attention during the performance of our procedures,
that fraud may have occurred. In addition, we will report to you any evidence or information
that comes to our attention during the performance of our procedures regarding illegal acts that
may have occurred, unless they are clearly inconsequential. We have no responsibility to
identify and communicate significant deficiencies or material weaknesses in your internal control
as part of this engagement. The procedures we perform in our engagement will be heavily
influenced by the representations that we receive from Client personnel. Accordingly, false
representations could cause material errors to go undetected. The Client, therefore, agrees to
indemnify and hold us harmless for any liability and all reasonable costs (including legal fees)
that we may incur in connection with claims based upon our failure to detect material errors
resulting from false representations made to us by any Client personnel and our failure to provide
an acceptable level of service due to those false representations.
The responsibility for auditing the records of Client rests with the Indiana State Board of
Accounts and the work performed by the Firm shall not include an audit or review of the records
or the expression of an opinion on financial data.
Client Responsibilities.
It is understood that the Firm will serve in an advisory capacity with the Client. The
Client is responsible for management decisions and functions, and for designating an individual
with suitable skill, knowledge or experience to oversee the services we provide. The Client is
responsible for evaluating adequacy and results of the services performed and accepting
responsibility for such services. The Client is responsible for establishing. and maintaining
internal controls, including monitoring ongoing activities.
City of Jeffersonville Board of Public Works
c/o Mr. Leslie D. Merkley, Esq.
Re: Gaming Related Studies
January 19, 2007
Page Three
Additional Services.
Exhibit A sets forth the scope of the Services to be provided by the Firm. From time-to-
time, additional services may be requested by the Client beyond the scope of Exhibit A. The
Firm may provide these additional services and be paid at the Firm's customary fees and costs
for such services. In the alternative, the Firm and the Client may complete a revised and
supplemented Exhibit A to set forth the additional services (including revised fees and costs, as
needed) to be provided. In either event, the terms and conditions of this letter shall remain in
effect.
If the foregoing accurately represents the basis upon which we may provide Services to
the Client, we ask that you execute this letter, in the space provided below setting forth your
agreement. Execution of this letter can be performed in counterparts each of which will be
deemed an original and all of which together will constitute the same document.
If you have any questions, please let us know.
By:
The undersigned hereby acknowledges and agrees to the for
Date:
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By:
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EXHIBIT A
Scope of Services and Fees
Scope of Services
BACKGROUND
The Scope of Work outlined below includes services that will be provided both by R.I.
Umbaugh & Associates, LLP, and Meridian Business Advisors ("MBA"), as our subcontractor,
(together, the "Consultants").
It is our understanding that the City is interested in hosting a riverboat casino either by moving
an existing Indiana casino or by effecting legislation that will authorize an additional license,
bringing the number of statewide licenses to 12. The analyses includes the following
components:
. A market analysis to estimate the level of gaming demand in the City,
. A financial analysis to estimate the Adjusted Gaming Revenue (AGR),
. A competitive analysis to estimate the impact of a Jeffersonville casino on the AGR of
the existing casinos in the vicinity, and
. A fiscal impact analysis to estimate the financial impact of the development on the City,
School District and State.
The fiscal impact study is represented as "Phase II" of the Scope of Services and would be
separately authorized by the Client or Client's counsel at or near the conclusion of Phase I ofthe
Services.
The following listed serVIces describe III detail the above analyses and the roles of the
Consultants.
I: Casino Market and Financial Analyses
MBA will develop estimates of adjusted gross gaming revenue (AGR) for a three-year period.
The estimate will be based on a marketing analysis that takes into consideration the socio-
economic demographics of the area, the population, competition, potential physical constraints of
the site and infrastructure. The projections will include the underlying assumptions dealing with
number of daily visitors, number of electronic devices and table games, and win/unit/day for
devices and table games. A pro forma income statement can be developed if deemed necessary
but is excluded in the professional fees presented below.
A competitive analysis to estimate the impact of a Jeffersonville casino on the AGR of the
existing casinos in the vicinity-Caesar's in Elizabeth, Grand Victoria in Rising Sun, and the
French Lick Resort Casino in French Lick. The analysis will estimate the impact on the existing
casinos given probable changes in their number of visitors, win/unit/day and the resulting change
in AGR and gaming-related taxes paid to the State and local jurisdictions.
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"
This information will be summarized in a written report, including an executive summary. Any
presentation materials, including Power Point presentations and other exhibits can be created
upon your request.
II:
Fiscal Impact Analysis
Umbaugh will estimate the fiscal impact of the development on the City, Greater Clark School
District, Clark County, and the State. Discussions also will be held with representatives of the
Town of Clarksville and other surrounding communities to ascertain fiscal impacts on those
communities. Incremental revenue and cost estimates will be developed for both Jeffersonville
and Clarksville, as well as the school district. For the State, the fiscal impact analysis will be
limited to gaming tax revenue estimates only. It is noted that the City of Jeffersonville has an
annexation in progress. The fiscal impact analysis would measure the impact assuming (a) the
annexation is successfully completed, and (b) the annexation is not completed.
Data upon which the analyses will be based will be collected and developed through discussions
with representatives of the local jurisdictions and with the Client relative to assumptions on the
casino project and its associated amenities-hotel, retail shopping, restaurants, etc. Specific data
needs will include, but are not limited to:
From the Local Jurisdictions:
. Revenue sources and associated rates/schedules and distribution formulas to other public
jurisdictions (Discussions may include optional distribution formulas.)
. Service costs and existing service levels
. Outstanding debt, annual principal and interest payments, terms of outstanding notes or
bonds.
. Budget and financial audits for last three-five years.
From the Client:
The build-out assumptions upon which the fiscal impact analysis will be based are a critical
component of the analyses and will require the time of the Client. Assumptions will include, but
are not limited to:
Gaming Facility:
. Amount of land for casino only including parking
. Improved land cost/sq. ft. including overhead
Other Commercial Development:
. Total square feet constructed by use type (retail, hotel, etc.)
. Construction time frame
. Improved land cost/sq. ft., including overhead
. Construction cost/sq. ft., including overhead for each use type
. Estimated annual retail sales per square foot
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The analyses will estimate the project's impact on the cities' and School District's revenues over
a multi-year period. The estimates will be developed on an annual basis and will distinguish
between ongoing revenues and new revenue that is generated each year due to additional
construction.
Similar to the revenue estimate methodology, estimated cities' and School District's
expenditures will be developed on a multi-year basis. Both capital and operating costs will be
included, with capital costs generally defined as one-time expenditures, and operating as ongoing
costs.
The report will include suggested revenue sharing formulae that will be flexible depending on
the ultimate site location of a casino. .
This information will presented in a report summarizing the revenue and cost estimates, to
determine the annual and cumulative revenue surplus or deficit generated by the project.
Summary pages and graphics will be included for presentations to local government and the
community if desired.
Drafts of all the reports outlined above will be presented to the Client for prior review and input.
Fees
The professional fees will be billed based upon hourly rates of the personnel assigned to the
various aspects of the analyses. The fees listed below are "not to exceed" amounts, therefore the
total fee may be less than that quoted. Any material change in the scope of work or Fees must be
approved in writing with reference to this Agreement.
Phase I: Market/Financial Analysis - $33,000
Phase II: Fiscal Impact Analysis - $31,000
In addition to Fees, we also charge for various ancillary services, for which you will be invoiced.
Such charges may include long distance telephone charges, photocopying, facsimile
transmission, computer research, mileage, travel expenses and other similar charges specifically
applicable to the engagement. It is estimated that one on-site visit by an MBA analyst will be
required for the casino market/financial analysis to gather data and four on-site visits by an
Umbaugh representative to gather data relative to both Phase I and II of the project.
The fees listed above are for the market, financial and fiscal analyses only and do not include any
time required to present the findings to the City Planning Commission, City Council, School
Corporations or to other public bodies. Fees for such services, if required, will be billed on the
basis of current, standard, hourly rates, plus travel-related costs.
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