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HomeMy WebLinkAboutUMBAUGH REDEVELOPMENT I UMBAUGH H.J.Umbaugh&Associates Certiftd Public Accountants,LLP $365 Keystone Grmsmg sulte 100 Indiaoa"rs,IN 46240,2687 Phone,317-465 1500 June 5,2017 Fa,t.317-461)115tliO wwwwnbaufeh coo Jeffersonville Redevelopment Commission c/o Ms. Heather Metcalf 500 Quartermaster Court, Suite 300 Jeffersonville,IN 47130 Re: Jeffersonville Redevelopment Commission-Proposed Municipal Advisory Services- Tax Increment Assistance Dear Ms.Metcalf- Thank you for requesting that H.J. Umbaugh & Associates, Certified Public Accountants, LLP (the "Firm")provide to the Jeffersonville Redevelopment Commission(the"Client")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, as set forth in Exhibit B, 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. Disclosure of Conflicts of Interest with Various Forms of Compensation The Municipal Securities Rulemaking Board (MSRB) requires us, as your municipal advisor, to provide written disclosure to you about the actual or potential conflicts of interest presented by various forms of compensation. Exhibit C sets forth the potential conflicts of interest associated with various forms of compensation. By signing this letter of engagement, the signee acknowledges that he/she has received Exhibit C and that he/she has been given the opportunity to raise questions and discuss the matters contained within the exhibit with the municipal advisor. Billing Procedures Normally, you will receive a monthly statement showing fees and costs incur-red 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. 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. 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. Unless otherwise agreed to by the Client and the Firm, the scope of services provided in Exhibit A will terminate 60 days after completion of the services in each Article. Jeffersonville Redevelopment Commission c/o Ms. Heather Metcalf Re: Jeffersonville Redevelopment Commission-Proposed Municipal Advisory Services- Tax Increment Assistance June 5,2017 Page 2 Accountants' Opinion In performing our engagement,we will be relying on the accuracy and reliability of information provided by Client personnel. The services provided may include financial advisory services, consulting services, and accounting report services such as compilation, preparation, and agreed upon procedures reports. Please see Exhibit A. 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 the 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. 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. E-Verify Program The Firm participates in the E-Verify program. For the purpose of this paragraph, the E-Verify program means the electronic verification of the work authorization program of the Illegal Immigration Reform and Immigration Responsibility Act of 1996 (P.L. 104-208), Division C, Title IV, s.401(a), as amended, operated by the United States Department of Homeland Security or a successor work authorization program designated by the United States Department of Homeland Security or other federal agency authorized to verify the work authorization status of newly hired employees under the Immigration Reform and Control Act of 1986 (P.L. 99-603). The Firm does not employ any "unauthorized aliens"as that term is defined in 8 U.S.C. 1324a(h)(3). Jeffersonville Redevelopment Commission c/o Ms. Heather Metcalf Re: Jeffersonville Redevelopment Commission- Proposed Municipal Advisory Services- Tax Increment Assistance June 5,2017 Page 3 Investments The Firm certifies that pursuant to Indiana Code 5-22-16.5 et seq. the Firm is not now engaged in investment activities in Iran. The Firm understands that providing a false certification could result in the fines, penalties, and civil action listed in I.C. 5-22-16.5-14. Municipal Advisor Registration The Firm is a Municipal Advisor registered with the Securities and Exchange Commission and the Municipal Securities Rulemaking Board. As such, the Firm is providing certain specific municipal advisory services to the Client. The Firm is neither a placement agent to the Client nor a broker/dealer. The offer and sale of any Bonds shall be made by the Client, in the sole discretion of the Client,and under its control and supervision. The Client agrees that the Firm does not undertake to sell or attempt to sell the Bonds, and will take no part in the sale thereof. Other Financial Industry Activities and Affiliations Umbaugh Cash Advisory Services, LLC ("UCAS") is a wholly-owned subsidiary of the Firm. UCAS is registered as an investment adviser with the Securities and Exchange Commission under the federal Investment Advisers Act. UCAS provides non-discretionary investment advice with the purpose of helping clients create and maintain a disciplined approach to investing their funds prudently and effectively. UCAS may provide advisory services to the clients of the Firm. UCAS has no other activities or arrangements that are material to its advisory business or its clients with a related person who is a broker-dealer, an investment company, other investment adviser or financial planner, bank, law firm or other financial entity. 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. We appreciate this opportunity to be of service to you and the Redevelopment Commission. Very truly yours, H.J. Umbaugh& Associates Certified Public Accountants, LLP BY� Brian C. on, Partner The undersigned hereby acknowledges and agrees to the foregoing letter of engagement. Jeffersonville Redevelopment Commission Date: ka By: Exhibit A Services Provided Scope of Services Article I below describes services to be performed on an annual basis. Article II includes periodic services that would only be performed upon request. Article I, Annual Tax Increment Finance("TIF")Services(Consulting and Financial Advisory Services A. Calculate Base Value Adjustments ("Neutralization' for Trending and General Reassessment 1. Contact the County Auditor's office and, with its cooperation and based on information provided by the County Auditor and Assessor, assist in performing or checking calculations with respect to base value adjustments, including determining base value adjustment factors, appeal and tax rate assumptions, and captured assessed values in conjunction with annual Trending or General Reassessments. In performing this work, we rely on the accuracy of the information provided by the County Auditor and Assessor. We will not audit or review their information. 2. Travel to the County Auditor's and/or Assessor's offices to perform fieldwork that may be required. Obtain new tax abatement information and a list of new developments and assessed values (if available) for the TIF Area(s) to use in the calculation. Compare resulting calculations to historical captured value, if necessary. B. Monitor TIF Revenue 1. For the TIF Area(s), analyze recorded TIF revenue, comparing it to the Firm's previous estimates, identifying the sources of material differences. 2. Identify major tax delinquencies materially affecting TIF revenue using information available from the County Auditor's office. 3. Based on input from Commission representatives: a. Trace known major developments and tax abatement reductions into the County's property tax records. b. Investigate, report and make recommendations regarding any material variances from anticipated assessed valuations and TIF revenue. 4. Update estimated TIF revenue projections, under current law, including the impact of known new developments, estimated tax abatement reductions, depreciation tables, if applicable,and anticipated changes in tax rates. 5. Prepare a schedule demonstrating the extent to which estimated TIF revenue is expected to be sufficient to pay actual debt service or lease rentals on outstanding bonds and other planned projects for the TIF Area(s), notifying the Commission of any anticipated shortfalls or significant surplus. Exhibit A Services Provided(cont'd) 6. Illustrate annual cash flow for each Allocation Area for a five-year period (or another period defined by the Commission)that accounts for debt and non-debt expenditures of the Commission. 7. Provide an annual written Report and additional written materials as appropriate, reporting findings to the Commission. If requested, present the Report at a meeting of the Commission. Such Report is limited to the purposes set forth herein, and may not be used in conjunction with the issuance of additional debt obligations. TIF revenue estimates in support of the issuance of debt will be accomplished pursuant to the parameters of separate agreements. C. Analyze TIF Databases for Missing Parcels and Parcel Changes 1. Interview County officials, staff members and others to locate declaratory resolutions, base value dates, original maps of the T1F Area(s), together with any boundary changes that may have occurred subsequent to the creation of the TIF Area(s). 2. Compare County Auditor's TIF parcel list and maps to determine the extent to which they reflect changes that have occurred to the TIF boundaries of the Area and incorporate parcel splits and combinations. 3. Suggest corrections to the TIF database,as needed. Article II. Periodic Services (Municipal Advisory and Consulting Services) Performed on an "As Requested"Basis A. Economic Development Proiect Evaluation and Preliminary Feasibility 1. In connection with a proposed economic development project or prospect (the "Project"), discuss with Client (or Client representative) the proposed Project; potential incentives; the use of TIF, tax abatement and other sources of funding; preliminary financing options and feasibility analyses; timing and investment information needed for analysis; and other issues and considerations. 2. Prepare an estimate of real and depreciable personal property assessed value for the proposed development based on investment information provided by the Company or its representatives. Prepare schedules of real and depreciable personal property tax abatement reductions, if applicable. 3. Prepare a preliminary TIF feasibility analysis to estimate the incremental property tax revenues that might be created by the Project and provide an estimate of the amount of bonds such revenues might support and potential incentive value. This preliminary feasibility analysis may consider the impact on the tax increment stream and bond size with and without tax abatement. Discuss bond options and security needed to market bonds, if applicable. 4. Prepare a preliminary analysis utilizing both new and existing TIF revenue taking into account any outstanding obligations payable from the existing TIF, and provide additional incentive options, if applicable. Exhibit A Services Provided(cont'd) 5. Discuss preliminary financing feasibility with Client and Company representatives and advisors. Attend meetings and participate in conference calls, as requested. 6. If requested by the Client, prepare additional TIF revenue estimates and financing feasibility analyses based on different investment assumptions and/or based on different financing terms, funding options and assumptions. 7. Assist with the establishment or expansion of a TIF Area, including TIF information for Declaratory Resolution and Economic Development Plan, preparation and distribution of a tax impact analysis required for overlapping taxing units, and attendance at public hearing and other municipal and redevelopment commission meetings, as necessary. B. Other TIF Services 1. At the request of the Commission, prepare analyses of TIF revenues and financing options for project planning purposes. 2. Prepare a tax increment replacement (TIR) worksheet for the Commission's submission to the Department of Local Government Finance and to the County Auditor's office, if necessary. 3. Attend meetings and/or hearings of the Commission to discuss specific and proposed projects or other items outlined in this Agreement. Exhibit B Fees For the services set forth in Exhibit A, the Firm's fees will be billed at the Firm's standard billing rates based upon the actual time and expenses incurred. Standard Hourly Rates by Job Classification 1/1/2017 Senior Partners $375.00 to $550.00 Partners/Principals $275.00 to $475.00 Managers $190.00 to $325.00 Consultants $130.00 to $250.00 Municipal Bond Disclosure Specialists $120.00 to $195.00 Support Personnel $105.00 to $150.00 • Billing rates are subject to change periodically due to changing requirements and economic conditions. Actual fees will be based upon experience of the staff assigned and the complexity of the engagement. The above fees shall include all expenses incurred by the Firm with the exception of expenses incurred for mileage which will be billed on a separate line item. No such expenses with the exception of mileage will be incurred without the prior authorization of the Client. The fees do not include the charges of other entities such as rating agencies,bond and official statement printers, couriers,newspapers,bond insurance companies, bond counsel and local counsel, and electronic bidding services, including Parity'. Coordination of the printing and distribution of Official Statements or any other Offering Document are to be reimbursed by the Client based upon the time and expense for such services. Exhibit C Disclosure Statement of Municipal Advisor PART A—Disclosures of Conflicts of Interest MSRB Rule G-42 requires that municipal advisors provide to their clients disclosures relating to any actual or potential material conflicts of interest, including certain categories of potential conflicts of interest identified in Rule G-42, if applicable. If no such material conflicts of interest are known to exist based on the exercise of reasonable diligence by the municipal advisor,municipal advisors are required to provide a written statement to that effect. Material Conflicts of Interest—The Firm makes the disclosures set forth below with respect to material conflicts of interest in connection with the Scope of Services under this Agreement, together with explanations of how the Firm addresses or intends to manage or mitigate each conflict. General Mitigations—As general mitigations of the Firm's conflicts, with respect to all of the conflicts disclosed below, the Firm mitigates such conflicts through its adherence to its fiduciary duty to Client, which includes a duty of loyalty to Client in performing all municipal advisory activities for Client. This duty of loyalty obligates the Firm to deal honestly and with the utmost good faith with Client and to act in Client's best interests without regard to the Finn's financial or other interests. The disclosures below describe, as applicable, any additional mitigations that may be relevant with respect to any specific conflict disclosed below. I. Compensation-Based Conflicts. The fees due under this Agreement are based on hourly fees of the Finn's personnel, with the aggregate amount equaling the number of hours worked by such personnel times an agreed-upon hourly billing rate. This form of compensation presents a potential conflict of interest if Client and the Finn do not agree on a reasonable maximum amount at the outset of the engagement, because the Firm does not have a financial incentive to recommend alternatives that would result in fewer hours worked. This conflict of interest is mitigated by the general mitigations described above. II. Other Municipal Advisor Relationships. The Firm serves a wide variety of other clients that may from time to time have interests that could have a direct or indirect impact on the interests of Client. For example, the Finn serves as municipal advisor to other municipal advisory clients and, in such cases, owes a regulatory duty to such other clients just as it does to Client under this Agreement. These other clients may, from time to time and depending on the specific circumstances, have competing interests, such as accessing the new issue market with the most advantageous timing and with limited competition at the time of the offering. In acting in the interests of its various clients,the Finn could potentially face a conflict of interest arising from these competing client interests. This conflict of interest is mitigated by the general mitigations described above. Exhibit C Disclosure Statement of Municipal Advisor(cont'd) PART B—Disclosures of Information Regarding Legal Events and Disciplinary History MSRB Rule G-42 requires that municipal advisors provide to their clients certain disclosures of legal or disciplinary events material to its client's evaluation of the municipal advisor or the integrity of the municipal advisor's management or advisory personnel. Accordingly, the Firm sets out below required disclosures and related information in connection with such disclosures. I. Material Legal or Disciplinary Event. There are no legal or disciplinary events that are material to Client's evaluation of the Firm or the integrity of the Firm's management or advisory personnel disclosed,or that should be disclosed, on any Form MA or Form MA-1 filed with the SEC. IL How to Access Form MA and Form MA-I Filings. The Firm's most recent Form MA and each most recent Form MA-I filed with the SEC are available on the SEC's EDGAR system at http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001610268. III. Most Recent Change in Legal or Disciplinary Event Disclosure. The Firm has not made any material legal or disciplinary event disclosures on Form MA or any Form MA-I filed with the SEC. PART C—Future Supplemental Disclosures As required by MSRB Rule G-42, this Disclosure Statement may be supplemented or amended, from time to time as needed,to reflect changed circumstances resulting in new conflicts of interest or changes in the conflicts of interest described above, or to provide updated information with regard to any legal or disciplinary events of the Firm. The Firm will provide Client with any such supplement or amendment as it becomes available throughout the term of the Agreement.