18-0522_ARBITRAGE COMPLIANCE SPECIALISTS, INC._Professional Services Agreement FOR PROFESSIONAL SERVICES—DEFINED AS:
ARBITRAGE CALCULATION SERVICES
CITY OF SAN JUAN CAPISTRANO
PROFESSIONAL SERVICES AGREEMENT
This Agreement is made and entered into as of July 1, 2018 by and between the City of
San Juan Capistrano, a municipal corporation organized and operating under the laws of the
State of California with its principal place of business at 32400 Paseo Adelanto, San Juan
Capistrano, CA 92675("City"), and Arbitrage Compliance Specialists, Inc., a corporation with its
principal place of business at 5975 S. Quebec Street, #205, Centennial, Colorado 80111
(hereinafter referred to as "Consultant"). City and Consultant are sometimes individually
referred to as "Party" and collectively as "Parties" in this Agreement.
RECITALS
A. City is a public agency of the State of California and is in need of professional
services for the following project:
Arbitrage Calculation Services (hereinafter referred to as "the Project").
•
B. Consultant is duly licensed and has the necessary qualifications to provide such
services.
C. The Parties desire by this Agreement to establish the terms for City to retain
" Consultant to provide the services described herein.
AGREEMENT
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. Services.
Consultant shall provide the City with the services described in the Scope of Services
attached hereto as Exhibit"A."
2. Compensation.
a. Subject to paragraph 2(b) below, the City shall pay for such services in
accordance with the.Schedule of Charges set forth in Exhibit"B
b. In no event shall the total amount paid for services rendered by
Consultant under this Agreement exceed the sum of $10,150. This amount is to cover all
printing and related costs, and the City will not pay any additional fees for printing expenses.
Periodic payments shall be made within 30 days of receipt of an invoice which includes a
detailed description of the work performed. Payments to Consultant for work performed will be
made on a monthly billing basis.
1
61147.02100\10974777.2
Updated April 2018
3. Additional Work.
If changes in the work seem merited by Consultant or the City, and informal
consultations with the other party indicate that a change is warranted, it shall be processed in
the following manner: a letter outlining the changes shall be forwarded to the City by Consultant
with a statement of estimated changes in fee or time schedule. An amendment to this
Agreement shall be prepared by the City and executed by both Parties before performance of
such services, or the City will not be required to pay for the changes in the scope of work. Such
amendment shall notrender ineffective or invalidate unaffected portions of this Agreement.
4. Maintenance of Records.
Books, documents, papers, accounting records, and other evidence pertaining to costs
incurred shall be maintained by Consultant and made available at all reasonable times during
the contract period and for four (4) years from the date of final payment under the contract for
inspection by City.
5. Time of Performance.
•
Consultant shall perform its services in a prompt and timely manner and shall
commence performance upon receipt of written notice from the City to proceed ("Notice to
Proceed"). Consultant shall complete the services required hereunder beginning July 1, 2018
through June 30, 2023. The Notice to Proceed shall set forth the date of commencement of
work.
6. Delays in Performance.
a. Neither City nor Consultant shall be considered in default of this Agreement for
delays in performance caused by circumstances beyond the reasonable control of the non-
performing party. For purposes of this Agreement, such circumstances include but are not
limited to, abnormal weather conditions; floods; earthquakes; fire; epidemics; war; riots and
other civil disturbances; strikes, lockouts, work slowdowns, and other labor disturbances;
sabotage or judicial restraint.
b. Should such circumstances occur, the non-performing party shall, within a
reasonable time of being prevented from performing, give written notice to the other party
describing the circumstances preventing continued performance and the efforts being made to
resume performance of this Agreement.
7. Compliance with Law.
a. Consultant shall comply with all applicable laws, ordinances, codes and
regulations of the federal, state and local government, including Cal/OSHA requirements.
b. If required, Consultant shall assist the City, as requested, in obtaining and
maintaining all permits required of Consultant by federal, state and local regulatory agencies.
2
61147.02100\10974777.2
Updated April 2018
7
,
c. If applicable, Consultant is responsible for all costs of clean up and/or removal of
hazardous and toxic substances spilled as a result of his or her services or operations
performed under this Agreement.
8. Standard of Care
Consultant's services will be performed in accordance with. generally accepted
professional practices and principles and in a manner consistent with the level of care and skill
ordinarily exercised by members of the profession currently practicing under similar conditions.
9. Assignment and Subconsultant
Consultant shall not assign, sublet, or transfer this Agreement or any rights under or
interest in this Agreement without the written consent of the City, which may be withheld for any
reason. Any attempt to so assign or so transfer without such consent shall be void and without
legal effect and shall constitute grounds for termination. Subcontracts, if any, shall contain a
provision making them subject to all provisions stipulated in this Agreement. Nothing contained
herein shall prevent Consultant from employing independent associates, and subconsultants as
Consultant may deem appropriate to assist in the performance of services hereunder.
10. Independent Consultant
Consultant is retained as an independent contractor and is not an employee of City. No
employee or agent of Consultant shall become an employee of City. The work to be performed
shall be in accordance with the work described in this Agreement, subject to such directions and
amendments from City as herein provided.
11. Insurance. Consultant shall not commence work for the City until it has provided
evidence satisfactory to the City 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 secured all insurance required under this section.
a. Commercial General Liability
(i) The Consultant shall take out and maintain, during the
performance of all work under this Agreement, in amounts not less than specified herein,
Commercial General Liability Insurance, in a form and with insurance companies acceptable to
the City.
(ii) Coverage for Commercial General Liability insurance shall be at
least as broad as the following:
(1) Insurance Services Office Commercial General Liability
coverage (Occurrence Form CG 00 01) or exact equivalent.
(iii) Commercial General Liability Insurance must include coverage
for the following:
3
61147.02100\10974777.2
Updated April 2018
(1) Bodily Injury and Property Damage
(2) Personal Injury/Advertising Injury
(3) Premises/Operations Liability
(4) Products/Completed Operations Liability
(5) Aggregate Limits that Apply per Project
(6) Explosion, Collapse and Underground (UCX) exclusion
deleted
(7) Contractual Liability with respect to this Contract
(8) Broad Form Property Damage
(9) Independent Consultants Coverage
(iv) The policy shall contain no endorsements or provisions limiting
coverage for (1) contractual liability; (2) cross liability exclusion for claims or suits by one
insured against another; (3) products/completed operations liability; or (4) contain any other
exclusion contrary to the Agreement.
(v) The policy shall give City, its officials, officers, employees,
agents and City designated volunteers additional insured status using ISO endorsement forms
CG 20 10 10 01 and 20 37 10 01, or endorsements providing the exact same coverage.
(vi) The general liability program may utilize either deductibles or
provide coverage excess of a self-insured retention, subject to written approval by the City, and
provided that such deductibles shall not apply to the City as an additional insured.
b. Automobile Liability
(i) At all times during the performance of the work under this
Agreement, the Consultant shall maintain Automobile Liability Insurance for bodily injury and
property damage including coverage for owned, non-owned and hired vehicles, in a form and
with insurance companies acceptable to the City.
(ii) Coverage for automobile liability insurance shall be at least as
broad as Insurance Services Office Form Number CA 00 01 covering automobile liability
(Coverage Symbol 1, any auto).
(iii) The policy shall give City, its officials, officers, employees, agents
and City designated volunteers additional insured status.
(iv) Subject to written approval by the City, the automobile liability
program may utilize deductibles, provided that such deductibles shall not apply to the City as an
additional insured, but not a self-insured retention.
c. Workers' Compensation/Employer's Liability
(i) Consultant certifies that he/she is aware of the provisions of
Section 3700 of the California Labor Code which requires every employer to be insured against
liability for workers' compensation or to undertake self-insurance in accordance with the
provisions of that code, and he/she will comply with such provisions before commencing work
under this Agreement.
4
61147.02100\10974777.2 • •
Updated April 2018
i
(ii) To the extent Consultant has employees at any time during the
term of this Agreement, at all times during the performance of the work under this Agreement,
the Consultant shall maintain full compensation insurance for all persons employed directly by
him/her to carry out the work contemplated under this Agreement, all in accordance with the
"Workers' Compensation and Insurance Act," Division IV of the Labor Code of the State of
California and any acts amendatory thereof, and Employer's Liability Coverage in amounts
indicated herein. Consultant shall require all subconsultants to obtain and maintain, for the
period required by this Agreement, workers' compensation coverage of the same type and limits
as specified in this section.
d. Professional Liability (Errors and Omissions)
At all times during the performance of the work under this Agreement the Consultant
shall maintain professional liability or Errors and Omissions insurance appropriate to its
profession, in a form and with insurance companies acceptable to the City and in an amount
indicated herein. This insurance shall be endorsed to include contractual liability applicable to
this Agreement and shall be written on a policy form coverage specifically designed to protect
against acts, errors or omissions of the Consultant. "Covered Professional Services" as
designated in the policy must specifically include work performed under this Agreement. The
policy must "pay on behalf of"the insured and must include a provision establishing the insurer's
duty to defend.
e. Minimum Policy Limits Required
(i) The following insurance limits are required for the Agreement:
Combined Single Limit
Commercial General Liability $1,000,000 per occurrence/$2,000,000 aggregate
for bodily injury, personal injury, and property
damage
Automobile Liability $1,000,000 per occurrence for bodily injury and
property damage
Employer's Liability $1,000,000 per occurrence
Professional Liability $1,000,000 per claim and aggregate (errors and
omissions)
(ii) Defense costs shall be payable in addition to the limits.
(iii) Requirements of specific coverage or limits contained in this
section are not intended as a limitation on coverage, limits, or other requirement, or a waiver of
any coverage normally provided by any insurance. Any available coverage shall be provided to
the parties required to be named as Additional Insured pursuant to this Agreement.
5
61147.02100\10974777.2
Updated April 2018
f. Evidence Required
Prior to execution of the Agreement, the Consultant shall file with the City
evidence of insurance from an insurer or insurers certifying to the coverage of all insurance
required herein. Such evidence shall include original copies of the ISO CG 00 01 (or insurer's
equivalent) signed by the insurer's representative and Certificate of Insurance (Acord Form 25-
S or equivalent), together with required endorsements. All evidence of insurance shall be
signed by a properly authorized officer, agent, or qualified representative of the insurer and
shall certify the names of the insured, any additional insureds, where appropriate, the type and
amount of the insurance, the location and operations to which the insurance applies, and the
expiration date of such insurance.
g. Policy Provisions Required
(i) Consultant shall provide the City at least thirty (30) days prior
written notice of cancellation of any policy required by this Agreement, except that the
Consultant shall provide at least ten (10) days prior written notice of cancellation of any such
policy due to non-payment of premium. If any of the required coverage is cancelled or expires
during the term of this Agreement, the Consultant shall deliver renewal certificate(s) including
the General Liability Additional Insured Endorsement to the City at least ten (10) days prior to
the effective date of cancellation or expiration.
(ii) The Commercial General Liability Policy and Automobile Policy
shall each contain a provision stating that Consultant's policy is primary insurance and that any
insurance, self-insurance or other coverage maintained by the City or any named insureds
shall not be called upon to contribute to any loss.
(iii) The retroactive date (if any) of each policy is to be no later than
the effective date of this Agreement. Consultant shall maintain such coverage continuously for
a period of at least three years after the completion of the work under this Agreement.
Consultant shall purchase a one (1) year extended reporting period A) if the retroactive date is
advanced past the effective date of this Agreement; B) if the policy is cancelled or not renewed;
or C) if the policy is replaced by another claims-made policy with a retroactive date subsequent
to the effective date of this Agreement.
(iv) All required insurance coverages, except for the professional
liability coverage, shall contain or be endorsed to waiver of subrogation in favor of the City, its
officials, officers, employees, agents, and volunteers or shall specifically allow Consultant or
others providing insurance evidence in compliance with these specifications to waive their right
of recovery prior to a loss. Consultant hereby waives its own right of recovery against City, and
shall require similar written express waivers and insurance clauses from each of its
subconsultants.
(v) The limits set forth herein shall apply separately to each insured
against whom claims are made or suits are brought, except with respect to the limits of liability.
Further the limits set forth herein shall not be construed to relieve the Consultant from liability in
6
61147.02100\10974777.2
Updated April 2018
rV
excess of such coverage, nor shall it limit the Consultant's indemnification obligations to the
City and shall not preclude the City from taking such other actions available to the City under
other provisions of the Agreement or law.
h. • Qualifying Insurers
(i) All policies required shall be issued by acceptable insurance
companies, as determined by the City, which satisfy the following minimum requirements:
(1) Each such policy shall be from a company or companies
with a current A.M: Best's rating of no less than A:VII and admitted to transact in the
business of insurance in the State of California, or otherwise allowed to place insurance
through surplus line brokers under applicable provisions of the California Insurance
Code or any federal law.
Additional Insurance Provisions
(i) The foregoing requirements as to the types and limits of insurance
coverage to be maintained by Consultant, and any approval of said insurance by the City, is
not intended to and shall not in any manner limit or qualify the liabilities and obligations
otherwise assumed by the Consultant pursuant to this Agreement, including but not limited to,
the provisions concerning indemnification.
(ii) If at any time during the life of the Agreement, any policy of
insurance required under this Agreement does not comply with these specifications or is
canceled and not replaced, City has the right but not the duty to obtain the insurance it deems
necessary and any premium paid by City will be promptly reimbursed by Consultant or City will
withhold amounts sufficient to pay premium from Consultant payments. In the alternative, City
may cancel this Agreement.
(iii) The City may require the Consultant to provide complete copies of
all insurance policies in effect for the duration of the Project.
(iv) Neither the City nor any of its officials, officers, employees, agents
or volunteers shall be personally responsible for any liability arising under or by virtue of this
Agreement.
j. Subconsultant Insurance Requirements. Consultant shall not allow any
subcontractors or subconsultants to commence work on any subcontract until they have
provided evidence satisfactory to the City that they have secured all insurance required under
this section. Policies of commercial general liability insurance provided by such subcontractors
or subconsultants shall be endorsed to name the City as an additional insured using ISO form
CG 20 38 04 13 or an endorsement providing the exact same coverage. If requested by
Consultant, City may approve different scopes or minimum limits of insurance for particular
subcontractors or subconsultants.
12. Indemnification.
7
61147.02100\10974777.2
Updated April 2018
a. To the fullest extent permitted by law, Consultant shall defend (with
counsel of City's choosing), indemnify and hold the City, its officials, officers, employees,
volunteers, and agents free and harmless from any and all claims, demands, causes of action,
costs, expenses, liability, loss, damage or injury of any kind, in law or equity, to property or
persons, including wrongful death, in any manner arising out of, pertaining to, or incident to any
acts, errors or omissions, or willful misconduct of Consultant, its officials, officers, employees,
subcontractors, consultants or agents in connection with the performance of the Consultant's
services, the Project or this Agreement, including without limitation the payment of all damages,
expert witness fees and attorney's fees and other related costs and expenses. Consultant's
obligation to indemnify shall not be restricted to insurance proceeds, if any, received by
Consultant, the City, its officials, officers, employees, agents, or volunteers.
b. If Consultant's obligation to defend, indemnify, and/or hold harmless
arises out of Consultant's performance of"design professional" services (as that term is defined
under Civil Code section 2782.8), then, and only to the extent required by Civil Code section
2782.8, which is fully incorporated herein, Consultant's indemnification obligation shall be
limited to claims that arise out of, pertain to, or relate to the negligence, recklessness, or willful
misconduct of the Consultant, and, upon Consultant obtaining a final adjudication by a court of
competent jurisdiction, Consultant's liability for such claim, including the cost to defend, shall not
exceed the Consultant's proportionate percentage of fault.
13. California Labor Code Requirements.
a. Consultant is aware of the requirements of California Labor Code
Sections 1720 et seq. and 1770 et seq., which require the payment of prevailing wage rates and
the performance of other requirements on certain "public works" and "maintenance" projects
("Prevailing Wage Laws"). If the services are being performed as part of an applicable "public
works" or "maintenance" project, as defined by the Prevailing Wage Laws, and if the total
compensation is $1,000 or more, Consultant agrees to fully comply with such Prevailing Wage
Laws. Consultant shall defend, indemnify and hold the City, its officials, officers, employees and
agents free and harmless from any claims, liabilities, costs, penalties or interest arising out of
any failure or alleged failure to comply with the Prevailing Wage Laws. It shall be mandatory
upon the Consultant and all subconsultants to comply with all California Labor Code provisions,
which include but are not limited to prevailing wages (Labor Code Sections 1771, 1774 and
1775), employment of apprentices (Labor Code Section 1777.5), certified payroll records (Labor
Code Sections 1771.4 and 1776), hours of labor (Labor Code Sections 1813 and 1815) and
debarment of contractors and subcontractors (Labor Code Section 1777.1). The requirement to
submit certified payroll records directly to the Labor Commissioner under Labor Code section
1771.4 shall not apply to work performed on a public works project that is exempt pursuant to
the small project exemption specified in Labor Code Section 1771.4.
b. If the services are being performed as part of an applicable "public works"
or "maintenance" project, then pursuant to Labor Code Sections 1725.5 and 1771.1, the
Consultant and all subconsultants performing such services must be registered with the
Department of Industrial Relations. Consultant shall maintain registration for the duration of the
Project and require the same of any subconsultants, as applicable. This Project may also be
subject to compliance monitoring and enforcement by the Department of Industrial Relations. It
shall be Consultant's sole responsibility to comply with all applicable registration and labor
8
61147.02100\10974777.2
Updated April 2018
compliance requirements. Notwithstanding the foregoing, the contractor registration
requirements mandated by Labor Code Sections 1725.5 and 1771.1 shall not apply to work
performed on a public works project that is exempt pursuant to the small project exemption
specified in Labor Code Sections 1725.5 and 1771.1.
c. This Agreement may also be subject to compliance monitoring and
enforcement by the Department of Industrial Relations. It shall be Consultant's sole
responsibility to comply with all applicable registration and labor compliance requirements. Any
stop orders issued by the Department of Industrial Relations against Consultant or any
subcontractor that affect Consultant's performance of services, including any delay, shall be
Consultant's sole responsibility. Any delay arising out of or resulting from such stop orders shall
be considered Consultant caused delay and shall not be compensable by the City. Consultant
shall defend, indemnify and hold the City, its officials, officers, employees and agents free and
harmless from any claim or liability arising out of stop orders issued by the Department of
Industrial Relations against Consultant or any subcontractor.
14. Verification of Employment Eligibility.
By executing this Agreement, Consultant verifies that it fully complies with all
requirements and restrictions of state and federal law respecting the employment of
undocumented aliens, including, but not limited to, the Immigration Reform and Control Act of
1986, as may be amended from time to time, and shall require all subconsultants and sub-
subconsultants to comply with the same.
15. Laws and Venue.
This Agreement shall be interpreted in accordance with the laws of the State of
California. If any action is brought to interpret or enforce any term of this Agreement, the action
shall be brought in a state or federal court situated in the County of Orange, State of California.
16. Termination or Abandonment
a. City has the right to terminate or abandon any portion or all of the work
under this Agreement by giving ten (10) calendar days written notice to Consultant. In such
event, City shall be immediately given title and possession to all original field notes, drawings
and specifications, written reports and other documents produced or developed for that portion
of the work completed and/or being abandoned. City shall pay Consultant the reasonable value
of services rendered for any portion of the work completed prior to termination. If said
termination occurs prior to completion of any task for the Project for which a payment request
has not been received, the charge for services performed during such task shall be the
reasonable value of such services, based on an amount mutually agreed to by City and
Consultant of the portion of such task completed but not paid prior to said termination. City shall
not be liable for any costs other than the charges or portions thereof which are specified herein.
Consultant shall not be entitled to payment for unperformed services, and shall not be entitled to
damages or compensation for termination of work.
b. Consultant may terminate its obligation to provide further services under
this Agreement upon thirty (30) calendar days' written notice to City only in the event of
9
61147.02100\10974777.2
Updated April 2018
substantial failure by City to perform in accordance with the terms of this Agreement through no
fault of Consultant.
17. Documents. Except as otherwise provided in "Termination or Abandonment,"
above, all original field notes, written reports, Drawings and Specifications and other
documents, produced or developed for the Project shall, upon payment in full for the services
described in this Agreement, be furnished to and become the property of the City.
18. Organization
Consultant shall assign Doug Pahnke as Project Manager. The Project Manager shall
not be removed from the Project or reassigned without the prior written consent of the City.
20. Limitation of Agreement.
This Agreement is limited to and includes only the work included in the Project described
above.
21. Notice
Any notice or instrument required to be given or delivered by this Agreement may be
given or delivered by depositing the same in any United States Post Office, certified mail, return
•
receipt requested, postage prepaid, addressed to:
CITY: CONSULTANT:
City of San Juan Capistrano Arbitrage Compliance Specialists
32400 Paseo Adelanto 5975 S. Quebec Street, #205
San Juan Capistrano, CA 92675 Centennial, Colorado 80111
Attn: Ken Al-Imam, Chief Financial Attn: Doug Pahnke, CPA, President
Officer/City Treasurer
and shall be effective upon receipt thereof.
22. Third Party Rights
Nothing in this Agreement shall be construed to give any rights or benefits to anyone
other than the City and the Consultant.
23. Equal Opportunity Employment.
Consultant represents that it is an equal opportunity employer and that it shall not
discriminate against any employee or applicant for employment because of race, religion, color,
national origin, ancestry, sex, age or other interests protected by the State or Federal
Constitutions. 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.
10
61147.02100\10974777.2
Updated April 2018
24. Entire-Agreement
This Agreement, with its exhibits, represents the entire understanding of City and
Consultant as to those matters contained herein, and supersedes and cancels any prior or
contemporaneous oral or written understanding, promises or representations with respect to
those matters covered hereunder. Each party acknowledges that no representations,
inducements, promises or agreements have been made by any person which are not
incorporated herein, and that any other agreements shall be void. This Agreement may not be
modified or altered except in writing signed by both Parties hereto. This is an integrated
Agreement.
25. Severability
The unenforceability, invalidity or illegality of any provision(s) of this Agreement shall not
render the provisions unenforceable, invalid or illegal.
26. Successors and Assigns
This Agreement shall be binding upon and shall inure to the benefit of the successors in
interest, executors, administrators and assigns of each party to this Agreement. However,
Consultant shall not assign or transfer by operation of law or otherwise any or all of its rights,
burdens, duties or obligations without the prior written consent of City. Any attempted
assignment without such consent shall be invalid and void.
27. Non-Waiver
None of the provisions of this Agreement shall, be considered waived by either party,
unless such waiver is specifically specified in writing.
28. Time of Essence
Time is of the essence for each and every provision of this Agreement.
29. City's Right to Employ Other Consultants
City reserves its right to employ other consultants, including engineers, in connection
with this Project or other projects.
30. 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
11
61147.02100\10974777.2
Updated April 2018
director, official, 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.
[SIGNATURES ON FOLLOWING PAGE]
12
61147.02100\10974777.2
Updated April 2018
SIGNATURE PAGE FOR PROFESSIONAL SERVICES.AGREEMENT
BETWEEN THE CITY OF SAN JUAN CAPISTRANO
AND ARBITRAGE COMPLIANCE SPECIALISTS,INC.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first
written above.
CITY OF SAN JUAN CAPISTRANO ARBITRAGE COMPLIANCE SPECIALISTS
By: By: A,/
ja - eget ' ?rt51)(0,k
City M ager Its:
Printed Name: D(2 PqIII,
til)9
ATTEST:
A1
By: ® .
ria orris, Ci PCIerk
APPROVED AS TO FORM:
By: 0
effrey Ballinger, City Attorney
13
61147.02100\10974777.2
Updated April 2018
Exhibit A
Scope of Services
ACS organizes its internal processes into three main areas: Project Management/Client Services,
Calculation Management, and Final Technical Review. ACS will undertake the necessary efforts in
order to satisfy the requirements of the scope of work outlined below.
PROVIDE ARBITRAGE COMPLIANCE PLANNING
ACS performs pre-calculation work on all rebate computations, ensuring that the relevant regulatory
and technical expertise necessary to identify the lowest, legally permissible arbitrage rebate liability
is used. Our experienced project managers will analyze each bond structure to determine which
bonds are subject to rebate, yield restriction, and applicable exceptions. ACS will then determine
IRS filing deadlines, extensions, and election requirements and input the applicable information into
our database tracking system to ensure timely reporting. Throughout the entire process, ACS will be
in constant communication with the, City to discuss any significant milestones or discuss any bond
issues that may be higher risk for arbitrage rebate and/or yield restriction payments.
CALCULATE THE AMOUNT OF THE CITY'S ARBITRAGE LIA BIL/TY.&_DELIVER APPROPRIATE
DOCUMENTATION -
After the collection of all pertinent data from the City, the information is analyzed`and input into our
rebate calculation software and the arbitrage rebate, spending exception/penalty excess earnings or
yield restriction calculations are performed. ACS will perform these calculations as requested by the
City but no later than the end of each fifth bond year thereafter until the City is advised that no
further calculations are required.
As part of the arbitrage rebate report distributed for each bond issue, ACS; includes several exhibits
accompanying the report that suppo lithe arbitrage liability reflected in the calculation. These exhibits
include a proof of investment yield, a combined schedule of activity for all funds subject to the
arbitrage requirements, as well as a separate listing of the arbitrage activity and investment rate of
return for each fund/account subject to the arbitrage requirements.
PROVIDE INVESTMENT YIELD COMPARISONS
Each calculation includes a combined investment return, and separate investment returns for each
fund and investments subject to the arbitrage requirements. These schedules assist in evaluating
which investments may/may not be attributing to a positive or negative arbitrage rebate liability.
PROVIDE THE APPROPRIATE IRS TAX FILINGS ASSOCIATED WITH EACH CALCULATION,AS
NEEDED
Mr. Pahnke and Mr. Sacks will prepare a signature ready IRS Forms 8038-T for payment of
arbitrage rebate/yield restriction or form 8038-R for recovery of overpayments. The forms will be
accompanied by a transmittal letter include detailed filing instructions.
PROVIDE WRITTEN REPORT DESCRIBING THE METHODOLOGY EMPLOYED, MAJOR
ASSUMPTIONS, CONCLUSIONS AND ANY RECOMMENDATIONS FOR CHANGES IN CITY
RECORDKEEPING AND INVESTMENT POLICY
Each arbitrage rebate report completed by ACS includes a clear and concise transmittal letter and
summary identifying the outstanding arbitrage liability for the computation period, the
corresponding bond yield, the corresponding investment yield for the computation period, and
whether any arbitrage payments are due during the most recent computation period. A separate
Summary included with the report also identifies the methodology employed, major assumptions,
and future recommendations or recordkeeping of expenditures and/or investments. Each report also
includes a statement that the methodology used may be relied upon by the City in determining the
arbitrage rebate liability.
ASSIST THE CITY IN THE EVENT OF AN IRS INQUIRY
We have an unmatched comprehensive knowledge of how the existing tax regulations are
interpreted as well as how new financial instruments may be treated by the IRS to keep our clients
in compliance with the Tax Code. As an independent firm specializing solely in the field of
arbitrage compliance, ACS does not provide bond counsel services, investment services, or
financial advisory services. Therefore, the IRS has regarded our calculations,as extremely reliable
and free from any internal or external influence that might be construed as a conflict of interest.
We have developed a thorough understanding of the IRS' enforcement philosophy and tactics and
we include initial preventative audit-proofing in our work product. ACS will defend our clients at
no additional charge in the event of an audit or inquiry. Throughout our firm's history, we have
not had any adverse findings by the IRS. Audits and inquiries have been quickly closed, saving
our clients extensive costs that are often associated with an audit.
LEGA L EXPERIENCE
Arbitrage rebate calculations are dependent upon the year of issuance and the set of regulations that
were effective at the time of issuance. Mr. Ira B. Sacks, ACS' in-house Tax Attorney, has worked
within the public finance legal field since the inception of the arbitrage rebate industry in 1986. This
historical legal experience is especially useful when Mr. Sacks collaborates with bond counsel
during audits or other sensitive client matters.
Mr. Sacks' extensive educational background includes Bachelor's Degrees in Accounting, Finance,
and Computer Science and Master's Degrees in Law, Taxation, and Business. Mr. Sacks possesses
vast experience in computation of arbitrage rebate and a thorough legal understanding of the Tax
Code. The result is an unmatched, comprehensive knowledge of tax regulation and tax regulation
interpretation. The combination of Mr. Sacks' knowledge, experience, and expertise ensures that the
work performed is consistent with the federal tax laws and our clients pay the lowest amount of
arbitrage rebate allowed under the Tax Code.
Member of the National Association of Bond Lawyers (NABL):
The Tax Code is a volatile and complex set of rules and regulations subject to frequent changes and
constant re- interpretation. As a member of NABL, ACS is informed on a daily basis of all
proposed and ultimately finalized changes to the Tax Code as well as the current IRS enforcement
focus. With the evolving Tax Code, it is imperative that an arbitrage rebate firm keep well-
informed of proposed regulations as well as current interpretations of the Tax Code.
•
LIFE-CYCLE APPROACH TOARBITRAGE SERVICES
ACS provides more than calculation services: We provide bond compliance services throughout the
entire life cycle of each debt issue beginning with the preliminary planning stage of a debt issuance,
continuing through the calculation process and ending with support services. ACS' life-cycle
approach to arbitrage services includes:
Pre-Issuance Stage: ACS experts review bond documents to ensure that statutory elections were
correctly adopted/declined.
Outstanding Period:
•. Legal review -ACS staff analyze each debt issue to determine the applicable exceptions and
bond compliance calculation requirements;
• ' Compliance Calculations —Our team of CPAs ensure that all bond compliance calculations are
performed on-time and compute the lowest allowable liability as allowed under the Internal
Revenue Code and Treasury Regulations;
• IRS Audit Defense— 100%track record on successfully defending our clients in IRS audits;
• Policy and Procedure Bond Compliance Manual-In use by over 800 governments;
• Bond Compliance Training-On-site or web-based training modules; and
• Bond Management System-ACS' compliance database tracks and provides notifications
of impending deadlines.
Maturity: Record Retention Services — Storage of bond and investment records to satisfy the
IRS'record retention requirements.
Arbitrage Rebate Training: ACS regularly provides free training for several State/Local
Government Associations. In addition to large group presentations, ACS provides routine webinar
and on-site presentations to clients who include selections from our bond compliance training
program that consists of 30 modules and provides CPE credits for participants.
On-Site Training: ACS also puts together customized on-site training based on the needs of the
participants. We do this to help clients meet their annual training goals, decrease the amount of time
needed to collect reporting information and to allow better communication of compliance matters
between ACS and our clients.
Exhibit B
Schedule of Charges
FEE QUOTE ARBITRAGE CALCULATION SERVICES ONLY
At a minimum, the IRS requires calculations every five years from the issuance date and upon final
maturity of the bonds. Since the City may also require calculations more frequently than every five years,
ACS is pleased to offer the City an annual report fee, in addition to a report fee for computation periods
in excess of 12 months. ACS does not charge additional fees for yield restriction, commingled funds,
transferred proceeds, or variable rate debt issues. In fact, our fees also include record retention
services, IRS audit support, and on-site contract transition.
The fees provided below may not be the lowest cost amongst all proposals received, however we believe
the offered prices are competitive and commensurate with the quality value and experience we have
provided our clients dating back to the inception of the arbitrage regulations in 1986. The IRS recognizes
the complexities and cost involved in the calculations, thereby providing for computation date credits to
be included in each rebate calculation. Our annual fee proposed below is still well below the 2018 IRS
credit amount of$1,700.
Annual Report Fee (While gross proceeds remain -City & SACRA) $700
(Per bond issue,0-12 months of activity)
Computation Periods in Excess of 12 Months (While gross proceeds remain)......................$350
(Per additional year.Activity added to report above)
Example: 5-year cumulative calculation fee =$2,100 (700+ ($350x 4years))
Example: 3-year cumulative calculation fee = $1,400 (700+ ($350x 2years))
Note: If proceeds have been fully expended, and the tax-exempt financing only requires a testing of
the debt service fund to ensure it meets the bona-fide exemption, our fee for providing the review in
lieu of the report is listed below:
Arbitrage Review Fee (Gross Proceeds Spent, per 5-year review period) .$575
•