21-0607_EADIE & PAYNE_Professional Services AgreementCITY OF SAN JUAN CAPISTRANO
PROFESSIONAL SERVICES AGREEMENT
This Agreement is made and entered into as of June 7, 2021 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 Eadie & Payne, a Limited Liability Partnership with its principal place of business at
3880 Lemon Street, Suite 300, Riverside, CA 92501 (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: Agreed-Up.on Procedures 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:
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 $32,500. 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.
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 not render 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 the services set forth in Exhibit A in a prompt and timely manner.
Consultant shall complete the services required hereunder in accordance with the activity schedule
provided in Exhibit A.
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.
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 Contractor
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.
following:
(iii) Commercial General Liability Insurance must include coverage for the
(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 Agreement
(8) 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.
(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
maintainprofessional 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
4
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 combined single limit
Employer's Liability $1,000,000 per accident or disease
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.
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 fogy the professional liability
coverage, shall contain or be endorsed to provide a 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 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.
L 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 subcohtractors 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.
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. Notwithstanding the foregoing, the contractor registration
requirements mandated by Labor Code Sections 1725.5 and 1771.1 shall riot 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 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 Bryan Gruber as Project Manager. The Project Manager shall not be
removed from the Project or reassigned without the prior written consent of the City.
19. Limitation of Agreement.
i
i
This Agreement is limited to and includes only the work included in the Project described above.
20. 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:
City of San Juan Capistrano
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
Attn: Ken AI -Imam
and shall be effective upon receipt thereof.
21. Third Party Rights
CONSULTANT:
Eadie & Payne, LLP
3880 Lemon Street, Suite 300
Riverside, CA 92501
Attn: Hong N. Nguyen, CPA
Nothing in this Agreement shall be construed to give any rights or benefits to anyone other than
the City and the Consultant.
22. 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.
23. 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. J
24. Severability
The unenforceability, invalidity or illegality of any provision(s) of this Agreement shall not render
the remaining provisions unenforceable, invalid or illegal.
25. 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.
26. Non -Waiver
None of the provisions of this Agreement shall be considered waived by either Parry, unless
such waiver is specifically specified in writing.
27. Time of Essence
Time is of the essence for each and every provision of this Agreement.
28. 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.
29. 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 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]
ID
SIGNATURE PAGE FOR PROFESSIONAL SERVICES AGREEMENT
BETWEEN THE CITY OF SAN JUAN CAPISTRANO
AND EADIE & PAYNE, LLP
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written
above.
CITY OF SAN JUAN CAPISTRANO EADIE & PAYNE, LLP
By: vv 'j �Jg, rf e By.
Benjamin Siege , City Manager
Its: Partner
AT
al
APPROVED AS TO FORM:
0
Jeff Ballinger, City Attorney
ited Name: Hong N. Nguyen
11
It V C�
IA[AAPBRATfA
J . fSTRBLISABO 1961
\ 1776 •
REQUEST FOR PROPOSAL
AGREED UPON PROCEDURES
ENGAGEMENT
CITY OF SAN JUAN CAPISTRANO
FINANCE DEPARTMENT
Released: February 22,"2021,
March 5, 2021 — Date by which to provide email to kalimam@sanjuancapistrano.org
to communicate intent to propose
I
I
EXHIBIT A - Page 1 of 25
INTRODUCTION
1.1 Purpose
The City of San Juan Capistrano (City) is requesting proposals from.
qualified independent certified public accounting firms to perform agreed
upon procedures to test for potential understatement of costs to design and
build a four-star hotel within the City (Inn at the Mission) and the potential
overstatement of costs to design and construct the related conditioned
public improvements. This engagement will be performed under the
American Institute of Certified Public Accountants ("AICPA') standards for
Agreed Upon Procedure Engagements. For purposes of this request for
proposal, such engagements and this engagement will be referred to as an
audit.
This Request for Proposal (RFP) describes the required Scope of Services,
the minimum information that must be included in the proposal, and the
evaluation and selection process. Failure to submit information in accordance
with this RFP's requirements and procedures may be cause for
disqualification. For purposes of the RFP, the terms "Proposer", "Auditors",
and "Firm" are interchangeable.
1.2 Due Date and Delivery
Proposals must be submitted via email to kalimamPsanivancapistrano.org
with a subject line that reads "Request for Proposal for Agreed Upon
Procedures Engagement'. The submitted proposals must be submitted on or
before:
Time: 4 p.m.
Date: Thursday, March 25, 2021
Email to: kalimam(@saneuancalpistrano.org
Proposals received after this time or submitted in any other manner will not be
accepted.
1.3 Questions Concerning the RFP
Questions and requests for clarification and/or explanation regarding any
aspect of this RFP, should be addressed to Ken AI -Imam, Chief Financial
Officer, at kalimam(c)sanivancapistrano.org no later than 4:00 pm on Friday,
March 5, 2021. Submitted questions must list the following title in the subject
line "RFP for Agreed Upon Procedures Engagement'.
Respondents shall email Ken AkImam by March 5, 2021 at the email indicated
above to indicate their interest in proposing and receiving City responses to
EXHIBIT A - Page 2 of 25
2.
1.4.
1.5
questions. The questions submitted and the written responses will be sent via
email response to all respondents who have indicated via email their interest.
The City is subject to the California Public Records Act and, therefore, the
Respondent's submissions, including questions and responses, may be made
available to requesting parties if such information is requested from the City in
accordance with the California Public Records Act. Respondents should
exclude from submittal any information considered confidential.
Project Schedule
The solicitation, receipt and evaluation of Firms and the selection of the
provider of independent audit services will correspond to the following
schedule:
Release of RFP
Provide declaration of intent to bid
Deadline for Questions
Responses to Questions to be emailed to
proposers
Proposals are Due
Firm selected
Execution of contract
Commencement of work
Completion of field work
Draft report provided to City
February 22, 2021
March 5, 2021
March 5, 2021
March 10, 2021
March 25, 2021
April 5, 2021
April 26, 2021
April 26, 2021
July 31, 2021
August 30, 2021
To participate in the distribution of responses to all questions, please email
your intent to propose to kalimam(c)sanivancai)istrano.oro by March 5,
2021.
All dates. are subject to change at the discretion of the City. Timing of
commencement of work is subject to availability of audit firm personnel and
hotel personnel as long as all field work is completed by June 30, 2021.
Conditions for Proposal Acceptance
The City, at its sole discretion, reserves the right to negotiate with any
qualified source(s). The City may waive any irregularity in any proposal.
All proposals will become the property of the City. If any proprietary
information is contained in the proposal, it should be clearly identified.
DESCRIPTION OF THE CITY GOVERNMENT
EXHIBIT A - Page 3 of 25
2.1 Contact Person
The audit firm's principal contact with the City, and contract administrator, will
be Ken AI -Imam, Chief Financial Officer. Mr. AI -Imam will coordinate the audit
process, as well as the bid process for professional independent auditing
services.
2.2 Schedule of Fieldwork
Upon selection for the engagement, the successful audit firm may contact
Ken AkImam, Chief Financial Officer to schedule an audit planning
conference.
3. NATURE OF SERVICES REQUIRED
3.1 Background
On October 30, 2018, the City of San Juan Capistrano ("City") entered into
a Revenue Sharing Agreement ("Agreement") with South Coast Investors
II, LLC ("Developer") to share transient occupancy tax revenue ("TOT")
generated by the Inn at the Mission, which opened to the public in Fall 2020.
A copy of the agreement is attached to this RFP.
A summary of pertinent terms follows:
Project Cost
Project Cost is defined to be the total project investment, including, but not
limited to all design, engineering, and construction costs associated with
building the four-star hotel, including all amenities, facilities, appurtenances,
furnishings, furniture, equipment, and Conditioned Public Improvements,
related thereto, and including all materials and labor relating thereto, but
excluding land acquisition costs and nonstructural hotel assets such .as
furniture and equipment.
Calculation of Annual Revenue Sharing Payment
For each calendar year beginning with calendar year 2021, the City must
shortly after the end of the calendar year return to the Hotel fifty percent of
the total amount of transient occupancy tax (TOT) paid by the Hotel to the
City for the preceding calendar year that was in excess of the Base TOT
Amount. The Base TOT Amount has been defined in the agreement to be
1.25% of the verified total Project Cost, excluding land value (original cost
to acquire the land) or land acquisition costs, but including the cost of all
Conditioned Public Improvements, as such are defined in the agreement.
The Auditor will test the costs recorded by the Hotel for the Project Cost as
defined above for the risk of potential understatement. This is because the
EXHIBIT A - Page 4 of 25
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smaller the amount of the Project Cost, the larger the amount ofannual
revenue that will be subject to the 50/50 split with the Hotel.
No procedures will be performed with respect to the TOT revenues reported
by the Hotel.
Maximum Amount Payable Over Life of the Agreement
The maximum amount payable under the ten-year agreement is the greater
of: (1) 1.75% of the sum of (a) the Project Costs as defined above plus (b)
land acquisition costs; or, (2) the actual verified cost expended to design
and construct the Conditioned Public Improvements. Because of this
provision, the Auditor will separately determine the ,amount of the
Conditioned Public Improvements and test the records supporting the same
for potential overstatement. This is because the larger the verified actual
cost of the Conditioned Public Improvements, the larger the amount of
revenue that potentially would be shared with the Hotel.
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Audit Requirement Provided by Agreement
Both the costs to design and construct the hotel and the costs to design and
construct the Conditioned Public Improvements must be subjected to a one-
time audit by an audit firm selected by the City. The cost to conduct this
audit will be paid by the hotel. For purposes of this audit, the hotel and
developer will make available for inspection (but not copying or retention)
accounting reports that itemize the costs to, design and construct the hotel
and conditioned public improvements and all documentation supporting
such costs. View only access to developer records, reports, and documents
will be provided via a secure portal provided by the developer. The City
plans to perform this audit in Spring/Summer 2021.
3.2 Auditing Standards Applicable to Engagement
The City of San Juan Capistrano (City) is requesting proposals from
qualified independent certified public accounting firms to perform agreed
upon procedures to test for potential understatement of costs to design
and build a four-star hotel within the city (Inn at the Mission) and the
potential overstatement of the costs of conditioned public improvements.
This engagement will be performed under the American Institute of
Certified Public Accountants ("AICPA") standards for Agreed Upon
Procedure Engagements. For purposes of this request for proposal, such
engagements and this engagement in particular will be referred to as an
audit. See additional specifications addressed in the Specific Audit
Approach subsection of Section 4.2 — Proposal Inclusions.
3.3 Retention and Access to Working Papers
EXHIBIT A - Page 5 of 25
All working papers and reports must be retained, at the auditor's expense,
for a minimum of five (5) years, unless the firm is notified in writing by the
City of the need to extend the retention period. Should standard retention
periods required by any of the standards identified in Section 3.2 be
increased beyond 5 years, the increased retention period shall be followed.
The auditor will be required to make working papers available, upon request
by the City or its designees.
3.4 Subcontracting
Should any firm submitting a proposal consider subcontracting portions of
the engagement, that fact must be clearly identified in the proposal along
with the name of the proposed subcontractor. Following the award of the
audit contract, no additional subcontracting will be allowed without the
express prior written consent by the City's CFO/City Treasurer.
3.5 Conflict of interest
The audit firm must submit a disclaimer statement disclosing that the firm
has no conflict of interest with regard to any of the work performed by the
firm for the City. This disclaimer must be included in the Proposal Letter
required in Section 4.3.
3.6 Acknowledgment of Contract Agreement
The audit firm shall enter into a contract with the City by signing the City's
Professional services agreement. A sample copy of the Agreement is
attached (Attachment B). The audit firm shall acknowledge acceptance of
the terms and conditions described in the sample copy of the Agreement.
If there are any exceptions to the term and conditions, the audit firm should
include those exceptions in the Proposal Letter described in Section 4.3.
4. PROPOSAL FORMAT AND CONTENT
4.1 Respondents shall submit a proposal that is clear, concise, complete, and
demonstrates the qualifications and experience applicable to the Scope of
Work.
• Proposal shall include a table of contents with a clear listing of headings
and pages.
• Proposal shall use a 10 -point or higher font and shall be a maximum of 20
pages, excluding resumes of key personnel.
• Firm shall submit one (1) original, four (4) hard copies, and one (1)
electronic copy in PDF format of the proposal.
EXHIBIT A - Page 6 of 25
4.2 Proposal Inclusions
Proposal Letter — The proposal letter (maximum length of 2 pages) must
be completed and executed by an authorized representative of the Firm
and include the following.
- An executive summary of the proposal identifying the Firm/team
being presented for consideration;
- Contact person (and related information) for the City's
correspondence regarding this RFP;
Acknowledgment of any addenda to the RFP;
- Exceptions the Firm has to the RFP and/or Sample Professional
Services Agreement, if any; and
- Disclaimer of conflict of interest as required in Section 3.6.
• Firm Qualifications and Experience
The Firm should state the size of the Firm the location of the office
from which the work on this engagement is to be performed, and
the number and nature of the staff to be so assigned to the
engagement.
An affirmative statement should
assigned key professional staff
public accountancy in California.
be included that the Firm and all
are properly licensed to practice
The Firm shall provide information on the results of federal or state
desk reviews or field reviews of its audits during the past three (3)
years. The Firm shall provide information on the circumstances
and status of any disciplinary actions taken or pending against the
Firm during the past three (3) years with State regulatory bodies or
professional organizations.
Partner. Supervisory, and Staff Qualifications
The Firm should provide as much information as possible regarding
the number, qualifications, experience, and training of the specific
staff to be assigned to this engagement
EXHIBIT A - Page 7 of 25
- Resumes for key personnel (engagement partners, technical
review partners, managers, in -charge auditors, and any specialists)
should be included (as an Appendix to the technical proposal)
Engagement partners, managers, in -charge auditors, and
specialists may be changed if these personnel leave the firm, are
promoted, or are assigned to another office. These personnel may
also be changed for other reasons with express written permission
from the City. However, in either case, the Firm provides that
replacements will have substantially the same or better
qualifications and experience and the City retains the right to
approve or reject replacements.
Specific Audit Approach
The successful proposer will include within its proposal a highly
detailed description of the specific procedures that will be
performed to effectively to detect the potential underreporting of
the Project Cost and the potential overreporting of the cost of
Conditioned Public Improvements. A simple reiteration of
engagement objectives without detailed specificity will not be
acceptable.
The design of procedures to detect the potential underreporting
of the Project Cost can be particularly challenging. As a part of
this proposal deliverable, the proposer is expected to
demonstrate an effective understanding of the risk of
underreporting the Project Cost by describing the means by
which a third party could underreport such costs and the specific
procedures that the proposer plans to perform to address those
risks.
• References
Please provide a list of not less than 5 client references for which
agreed upon procedures engagements have been performed by
the Firm's office that will be assigned responsibility for the audit.
For each reference listed, provide the name of the organization,
engagement partner, engagement manager, total hours for the
project, dates for which the service(s) were being performed, type
of service(s) provided and the name, address, telephone number,
and email of the principal client
• Cost of Services
EXHIBIT A - Page 8 of 25
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The cost of this engagement will be borne by the hotel. Nevertheless, in
support of the Hotel, the City desires that the procedures to be performed
will be done in a expeditious manner to avoid the imposition of
unnecessary costs on the Hotel. The cost of services can provided as a
section of the proposal (i.e., not bound separately).
Costs shall indicate the total all-inclusive maximum price, which shall be
based upon an estimate of the hours to complete the engagement broken
down by classification along with the hourly rates to be charged for each
classification. The cost proposal should include all pricing information
relative to performing the audit engagement as described in this RFP. The
total all-inclusive maximum price to be bid is to contain all direct and
indirect costs, including all out-of-pocket expenses. The City will not be
responsible for expenses incurred in preparing and submitting the
proposals. The cost proposal should also include the Firm's hourly rates
by classification should the City desire additional services not covered by
this RFP.
4.3 Respondents shall submit a proposal that is clear, concise, complete, and
demonstrates the qualifications and experience applicable to the Scope of
Work.
The proposals will be evaluated using the following criteria -and weightings:
The following factors and weightings will be considered in the evaluation of
proposals:
60 points - Effectiveness of procedures to detect underreporting of the
Project Cost.
30 points - Effectiveness of procedures to detect overreporting of the
Conditioned Project Improvements costs.
10 points — Cost of engagement
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EXHIBIT A - Page 9 of 25
6. SELECTION PROCESS
In accordance with its Municipal Code Section 3-4.306, the City will adhere to the
following procedures in evaluating proposals. A Selection Committee
(Committee), which comprises City's staff and may include outside parties, will
screen and review all proposals according to the weighted criteria set forth above.
'6.1 Responsiveness Screening
• Proposals will first be screened to ensure responsiveness to the RFP. The
City may reject as non-responsive any proposal that does not include the
documents required to be submitted by this RFP. At any time during the
evaluation process, the City reserves the right to request clarifications or
additional information from any or all Proposers regarding their proposals.
6.2 Initial Proposal Review
• The Committee will initially review and evaluate all responsive written
proposals based upon the Evaluation Criteria set forth above. The
Committee may also contact the Proposer's references. Proposals that
receive the highest evaluation scores may be invited to the next stage
of the evaluation process. The City may reject any proposal in which a
Proposer's approach, qualifications, or price is not considered acceptable
by the City. An unacceptable proposal is one that would have to be
substantially rewritten to make it acceptable. The City may conclude the
evaluation process at this point and recommend award to the lowest
responsible bidder. Alternatively, the City may elect to negotiate directly
with one or more Proposers to obtain the best result for the City prior to
making a recommendation or selection.
6.3 Interviews, Reference Checks, Revised Proposals, Discussions
Following the initial screening and review of proposals, the Proposers
included in this stage of the evaluation process may be invited to participate
in an oral interview. The individual(s) from Proposer's firm that will be
directly responsible for carrying out the contract, if awarded, should be
present at the oral interview. The oral interview may, but is not required
to, use a written question/answer format for the purpose of clarifying the
intent of any portions of the proposal.
In addition to conducting an oral interview, the City may during this stage
of the evaluation process also contact and evaluate the Proposer's
references, contact any Proposer to clarify any response or request revised
or additional information, contact any current users of a Proposer's
services, solicit information from any available source concerning any
aspect of a proposal, and seek and review any other information deemed
EXHIBIT A - Page 10 of 25
pertinent to the evaluation process.
Following conclusion of this stage of the evaluation process, the Committee
will again rank all Proposers according to the evaluation criteria set forth
above. The Committee may conclude the evaluation process at this
point, and make a recommendation for award, or it may request Best
and Final Offers from Proposers. The City may accept the proposal or
negotiate the ,terms and conditions of the agreement with the highest
ranked firm, which shall be determined to be the lowest responsible bidder.
The City may recommend award without Best and Final Offers, so
Proposers should include their best proposal with their initial submission.
6.4 Final Selection
Recommendation for award is contingent upon the successful negotiation
of final contract terms. Negotiations shall be confidential and not subject
to disclosure to competing Proposers unless an agreement is reached. If
contract negotiations cannot be concluded successfully within a time
period determined by the City, the City may terminate negotiations and
commence negotiations with the next highest scoring Proposer or withdraw
the RFP.
6.5 Other matters
Response Preparations: No reimbursement will be made by the City for
costs incurred in the preparation of the response to this RFP. Submitted
materials will not be returned and will become the property of the City.
Right to Reject Proposals: Submission of a proposal indicates acceptance
by the submitting firm of the conditions contained in this request for proposal
unless clearly and specifically noted in the proposal submitted and
confirmed in the agreement between the City and the firm selected. The
City reserves the right without prejudice to.reject any or all proposals, or to
waive any requirement of this RFP.
Proposer is encouraged to review this RFP carefully in its entirety prior to
preparation of its Proposal. The City reserves the right to reject any or all
Proposals or to select the Proposal most advantageous to the City. The
City reserves the right to verify all information submitted in the Proposal.
A. Amendments to RFP. The City reserves the right to amend the RFP
or issue to all Proposers a Notice of Amendment to answer questions for
clarification.
B. No Commitment to Award. Issuance of this RFP and receipt of
Proposals does not commit the City to award a Contract/
Agreement. The City expressly reserves the right to postpone the
Proposal for its own convenience, to accept or reject any or all Proposals
EXHIBIT A - Page 11 of 25
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received in response to this RFP, to negotiate with more than one
Proposer concurrently, or to cancel all or part of this RFP.
C. Amendments to Proposals. No amendment, addendum or
modification will be accepted after the deadline stated herein for receiving
Proposals. Proposer may modify or amend its Proposal only if the City
receives the amendment prior to the deadline stated herein for receiving
Proposals.
D. Non -Responsive Proposals. A Proposal may be considered non-
responsive if conditional, incomplete, or if it contains alterations of form,
additions not called for, or other irregularities that may constitute a
material change to the Proposal.
E. Late Proposals. The City will not be responsible for Proposals that
are delinquent, lost, incorrectly marked, sent to an address other than
that given herein, or sent.by mail or courier service and not signed for by
the City.
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EXHIBIT A - Page 12 of 25
COPY OF REVENUE SHARING AGREEMENT
EXHIBIT A - Page 13 of 25
TRANSIENT OCCUPANCY TAXES
REVENUE SIiARING AGREEMENT
THIS TRANSIENT OCCUPANCY TAXES REVENUE SHARING AGREEMENT
("Agreement") is entered into as of October30 2018, by and between CITY OF SAN JUAN
CAPISTRANO, a California municipal corporation ("City"), and South Coast Investors II, LLC,
owner of PLAZA BANDERASANN AT THE MISSION HOTEL PROJECT ("Hotel"). City
and Hotel are sometimes individually referred to as "Party" and collectively as "Parties."
RECITALS
A. Pursuant to City Council Policy 135, effective June 19, 2018, the City created the
Citywide Luxury Hotel Transient Occupancy Tax Revenue Sharing Incentive Program to
encourage the development of luxury hotel properties within the City.
B. Hotel owns certain real property in the City, as more fully described in Exhibit
"A" attached hereto and incorporated herein by this reference ("Property"), on which Hotel
intends to develop and operate a 4 -star or 4 -diamond rated hotel consisting of approximately 124
,guest rooms in addition to mixed uses, including retail and restaurant uses ("Project").
C. Pursuant to City Council Policy 135, City wishes to provide Hotel an incentive to
operate the Project in order that increased visitation will generate additional Transient
Occupancy Tax ("TOT"), as defined in Section 3-3.603 of the San Juan Capistrano Municipal
Code, and sales tax to the City.
D. City has determined that revenue sharing with Hotel, in accordance with the terms
and conditions set forth in the City Council Policy No. 135 and as contemplated by this
Agreement, is of public benefit and contributes to the general welfare of its citizens because the
development of the Project will create both temporary construction as well as permanent
operational jobs and would redevelop a previously underutilized site thereby further serving as
an economic catalyst to the City by expanding the lodging options and amenities which support
tourism.
AGREEMENT
NOW, THEREFORE, in consideration of the benefits to be derived by each Party from
the performance of the covenants and conditions set forth herein, City and Hotel agree as
follows:
Definitions
1.1 `Base TOT Amount" shall mean 1.25% of the verified project investment which
shall be all project investment costs, including, but not limited to all, design, engineering, and
construction costs associated with the four-star, hotel project, including all related amenities,
facilities, appurtenances, and conditioned public improvements, relating thereto, and including
all materials and labor relating thereto, but excluding the land value or land acquisition costs.
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EXHIBIT A - Page 14 of 25
1.2 "Commencement Date" shall mean January 1st of the year following the first day
of the Project's commercial operation.
1.3 "Conditioned Public Improvements" shall mean those certain improvements
described in City Council Resolution 10-10-05-05 (Exhibit E to the "Development Agreement")
and Exhibit B to this Agreement as listed below%
Condition 48: Water System
Condition 49: Water Hydrants
Condition 64: Street Improvement Plans [for sidewalks and street lights]
Condition 105: Replace Driveway and Curb Depressions with Sidewalk and Curbs
Condition 117: Utility Undergrounding on Street Frontages
Mitigation Measure 4.11.201 b: 12 Inch High Pressure Line
1.4 "De minimis Amount" shall mean 1.75% of the total Project cost, including the
land value or land acquisition costs, or such other amount as determined by the Courts or the
Department of Industrial Relations. For the avoidance of doubt, the land value and land
acquisition costs are included in the De minimis Amount; but are excluded from the Base TOT
Amount.
1.5 "Development Agreement" shall mean that certain Development Agreement
entered into by and between City and Stroscher G3, LLC dated July 5, 2011.
1.6 "Revenue Sharing Cap" shall mean the greater of the actual verified cost
expended to design and construct the conditioned public improvements or the De minimis
Amount.
1.7 "Revenue Sharing Payment" shall mean the annual City payment to Hotel of the
Shared TOT Amount, until the cumulative amount of all Revenue Sharing Payments equals the
Revenue Sharing Cap. Each Revenue Sharing Payment contemplated under this Agreement
shall be within the annual appropriations limit of the City for the applicable fiscal year
established in accordance with California Constitution Article XIIIB and contingent upon
Hotel's compliance with all terms of this Agreement.
1.8 "Revenue Sharing Termination Date" shall mean the tenth anniversary of the
Commencement Date or when the Revenue Sharing Cap selected by the Hotel pursuant to
Section 3.2 has been reached, whichever shall occur first.
1.9 "Shared TOT Amount" shall be an amount equal to fifty percent (50%) of the
TOT that is received by the City for lodging activity occurring at the Project during each
calendar year exceeding the Base TOT Amount, until the cumulative amount of all payments of
the Shared TOT Amount is equal to the Revenue Sharing Cap.
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EXHIBIT A - Page 15 of 25
2. Agreement Assumptions and Hotel Revenue Shanyg.Ca Selec6'on
2.1 For this Project, Hotel has provided the following assumptions:
2.1.1 The Base TOT Amount for this Project is anticipated to be approximately
$475,874 annually.
2.1.2 The total Project cost, including land and acquisition costs, is anticipated
to be less than $50,000,000 (See Section 4.1 for audit confirmation).
2.1.3 The Conditioned Public Improvements cost are anticipated to be
approximately $1,998,500 (See Section 4.1 for audit confirmation).
2.1.4 The De minimis Amount, pursuant to case law interpreting Labor Code
Section 1720(c)(3), is anticipated to be less than $875,000, which is significantly less than the
amount of the Conditioned Public Improvement costs.
2.2 Based upon these assumptions and following the audit confirmation of costs as set
forth in Section 4. 1, below, it is anticipated that the Revenue Sharing Cap will be an amount
equal to or less than (and in no event more than) the actual, verified, cost expended to design and
construct the Conditioned Public Improvements for the Project.
3. Revenue Sharing= Payment Commitment and Conditions on Pavment.
3.1 In consideration for Hotel's operation of the Project on the Property and the other
conditions and covenants provided for herein, if and when the Hotel is built and operated on the
Property, and all conditions precedent to Revenue Sharing Payment have been satisfied, the City
shall annually pay to Hotel the Shared TOT Amount for the immediately preceding calendar year
until such time as the Revenue Sharing Cap, selected in Section 2.2 above, has been reached.
3.2 TOT to be included in the Revenue Sharing Payment shall be the TOT generated
by the Project following the Commencement Date and shall continue annually until Revenue
Sharing Termination Date.
3.3 Hotel shall at all times remit to City full payment of TOT as required by the
City's Municipal Code. The annual Revenue Sharing Payment for each applicable calendar year
shall be made within sixty (60) days of the receipt by the City of the full amount of TOT that is
due to the City for Project lodging activity occurring during that calendar year.
3.4 Notwithstanding any other provision of this Agreement, the City shall only make
Revenue Sharing Payments pursuant to this Agreement on a calendar year by calendar year basis
from TOT revenues due to the City for lodging activity at the Project that occurred during each
respective calendar year in exchange for consideration received from the Hotel to the City during
that same calendar year.
3.5 In the event of a breach by the City with respect to Revenue Sharing Payments
provided for under this Agreement Hotel agrees to waive any right to:acceleration of all future
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EXHIBIT A - Page 16 of 25
Revenue Sharing Payments. The Hotel shall only be able to pursue collection. of Revenue
Sharing Payment on an individual calendar year basis, as such payments' became due.
4. Conditions Precedent- to Receipt of Revenue Sharing Payment. As a condition precedent
to payment, Hotel shall complete the following conditions:
4.1 The Conditioned Public Improvements shall have been installed and inspected by
the City Engineer to ascertain that the Conditioned Public Improvements are complete,
acceptable to the City, and in accordance with the conditions of the Development Agreement.
Hotel shall have made available to an audit firm selected by the City for inspection (but not
copying or retention), accounting reports that itemize the costs of the Conditioned Public
Improvements and total Project costs, as well as all documentation supporting such costs,
including vendor invoices that clearly identify their association to the specified improvements.
The audit firm shall have subjected the costs so itemized to auditing procedures in accordance
with a scope of work approved by'the City, which shall have resulted in a report that supports the
Hotel's representation as.to the total Project costs and the cost of all Conditioned Public
Improvements. These auditing procedures shall be performed at the sole cost and expense of the.
Hotel.
4.2 Hotel shall commence commercial operation of the Project by December 31,
2021. If Hotel fails to commence commercial operation prior to that date, then the City, in its
sole discretion, may terminate this Agreement by delivering written notice of such termination to
Hotel. Following such termination, neither Party shall have any further rights, duties or
obligations hereunder, and the City shall have no obligation to make any Revenue Sharing
Payment, provided however that if this Agreement is not so terminated and Hotel subsequently
commences operation, the terms of this Agreement shall apply and the City's right to terminate
shall be void. Additionally, the foregoing shall not prohibit the Hotel from re -applying under
City Council Policy 135 if the Hotel commences commercial operation at a later date.
4.3 Be at all times operated and able to demonstrate full compliance as either a four-
star or above hotel under the Forbes Travel Guide star criteria, or as a four diamond or above
hotel under the American Automobile Association (AAA) diamond ratings or equivalent if a
later, generally acceptable rating service becomes available that is acceptable to the City
Council, in their sole discretion. Approval requirements include a thorough certification of
property characteristics such as cleanliness and condition, management and staff, exterior,
grounds and public areas, guestroom decor, ambiance, amenities, bathrooms, and guest services.
Confirmation that the Project is operating as a four-star or above, or four -diamond or above, or
equivalent hotel, shall be provided to City prior to the Commencement Date by a written
certification to be provided by the Hotel, at Hotel's sole cost and expense, resulting from an
independent third party audit by an auditor or consultant approved by the City, in City's
reasonable discretion. This certification shall be conducted on an annual basis at Hotel's sole
cost and expense.
4.4 At all times the Project shall include at a minimum the following amenities to the
extent (i) approved by the City and any other governmental agency with approval authority over
such amenities and (ii) required to obtain a four-star or above, or four -diamond or above, or
equivalent rating designation:
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EXHIBIT A - Page 17 of 25
4.4.1 Full service spa;
4.4.2 Outdoor pool and Jacuzzi;
4.4.3 Fitness room;
4.4.4 Valet parking during peak operating periods;
4.4.5 Room service; and
4.4.6 Event center
5. Public Benefit and Purpose. The City Council has determined that encouraging economic
development, including private investment that involves creation of new jobs and income in the
City, or the retention of existing jobs and income that would otherwise be lost or be unavailable
to the residents of the City, is a valid exercise of its powers and provides an important public.
benefit and serves an important public purpose. By authorizing the City Manager' to enter into
this Agreement, the City Council has determined that the benefits accruing as a result of the
transactions contemplated by this Agreement, including, without limitation, (i) direct benefits
such as the increase in high quality hotel rooms and their role in increasing tourism; (ii)
increased revenues from property, sales, parking, business license, utility and TOT, (iii)
enhanced economic opportunities generated by the development of a new hotel serving the City,
and (iv) the acceleration of quality jobs and infrastructure to the City represent fair consideration
for all of the obligations to be undertaken by the City as contemplated by this Agreement.
6. Indeffiniffeation. Hotel shall defend, assume all responsibility for and hold the City, its
council members, officers and employees, harmless from all demands, claims, actions and
damages, of whatever type or nature, including all costs of defense and attorneys' fees, to any
person or property arising out of or related to this Agreement, or caused by any of Hotel's
activities under this Agreement, whether such activities or performance thereof by Hotel or
anyone directly or indirectly employed or contracted with by Hotel and whether such damage
shall accrue or be discovered before or after commencement of operation of the Project.
7, Default.
7.1 Defaults. Any one or all of the following events shall constitute a default by
Hotel:
7. 1.1 Any misleading statement, misrepresentation or warranty of Hotel herein
or in any other writing at any time furnished by Hotel to the City expressly relating to this
Agreement that materially harms the City or materially diminishes the benefit of the Agreement
to the City;
7.1.2 Nonperformance when due of any of the obligations described herein, or
failure to perform any obligation or covenant contained herein including, without limitation,
noncompliance with Section 4.3;
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EXHIBIT A - Page 18 of 25
7.1.3 The filing by or against Hotel of a petition for relief under the Bankruptcy
Reform Act of 1978 or any bankruptcy or debtor relief law;
7.1.4 A general assignment by Hotel for the benefit of creditors or the
appointment of any receiver or trustee of all or any portion of the assets of Hotel; and
7.1.5 The transfer or assignment of this Agreement without approval by the
City.
7.1.6 Failure to maintain status as a four-star or above hotel under the Forbes
Travel Guide star criteria, or as a four diamond or above hotel under the American Automobile
Association (AAA) diamond ratings or equivalent if a later, generally acceptable rating service
becomes available that is acceptable to the.City Council, in their sole discretion.
7.1.7 Nonperformance under any entitlement, development permit, or other
agreement between Hotel, any affiliates or related entities of Hotel, and the City related to the
Property or the.Project, including but not limited to:
(a) Architectural Control 18-024;
(b) Agreement Relating To Encroachment For Landscaping and
Parking for the Plaza Banderas Hotel Development Over an Unused Portion of City Highway
Easement;
(c) Joint Nondisclosure, Indemnity, and Litigation Defense Agreement
by and between the City of San Juan Capistrano, California and Mission Commercial Properties,
Inc.
7.2 Itemedics. Upon the occurrence of a default which remains uncured by Hotel
within ten (10) business days of its receipt of written notice from City of such default (or up to
thirty (3 0) days if such default is not capable of being cured within such ten (10) -business day
period provided that Hotel commences its cure within such ten (10) -business day period), the
City, at its option, may declare this Agreement to be in default and, in such event, the City shall
have the right to terminate this Agreement, in which event the City shall have no further
obligation to disburse all or any portion of Revenue Sharing Payment.
7.3 No Liability of City Member. No City Council Member, official or employee of
the City shall be personally liable to Hotel, or any successor in interest, in the event of any
default or breach by City under this Agreement or for any amount which may become due to
Hotel or any successor or on any obligations under the terms of this Agreement.
8. Compliance With GOVen11.110 ttal2Z,2gulations.
8.1 Hotel shall, at its sole cost and expense, comply with all applicable municipal,
county, state and federal laws, rules, regulations and ordinances now in force, or which may
hereafter be in force, pertaining to its activities contemplated under this Agreement, including,
but not limited to, issuance of building and use permits and compliance with all federal and state
labor laws (collectively, "Laws"). Supplementing the indemnity set forth in Section 7 above,
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EXHIBIT A - Page 19 of 25
Hotel shall defend, indemnify and hold the City, its elected officials, officers, members,
employees and agents free and harmless from any claims, liabilities, costs, penalties or interest
arising out of any failure or alleged failure of Hotel to comply with such Laws relating to this
Agreement.
9. Payment orProvailina Wastes.
9.1 By its execution of this Agreement, Hotel certifies that it is aware of the
requirements of California Labor Code Sections 1720 et seq, and 1770 et seq., as well as
California Code of Regulations, Title 8, Section 16000 et seq. ("Prevailing Wage Laws"), which
require the payment of prevailing wage rates and the performance of other requirements on
certain "public works" and "maintenance" projects. Hotel acknowledges that the City has made
no representation, express or implied, to Hotel or any person associated with Hotel regarding
whether or not laborers employed relative to the construction, installation or maintenance of.
improvements on the Property, if any, must be paid the prevailing per diem wage rate for their
labor classification, as determined by the State of California, pursuant to Prevailing Wage Laws.
Hotel agrees with the City that Hotel shall assume the responsibility and be solely responsible for
determining whether or not laborers employed relative to any construction of capital
improvements or maintenance on the Property must be paid the prevailing per diem wage rate for
their labor classification. If the project being performed is an applicable "public works" or
"maintenance" project, as defined by the Prevailing Wage Laws, Hotel agrees to fully comply
with such Prevailing Wage Laws. If required, Hotel shall make copies of the prevailing rates of
per diem wages for each craft, classification or type of worker needed to execute the work on the
project available to interested parties upon request, and shall post copies at the Hotel's principal
place of business and the project site.
9.1.1 Hotel, on behalf of itself, its successors, and assigns, waives and releases
the City from any right of action that may be available to any of them pursuant to California
Labor Code Sections 1726 and 1781. Hotel acknowledge the protections of California Civil
Code Section 1542 relative to the waiver and release contained in this Section 8.1.1, which reads
as follows:
A. GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE,
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS/HER
FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM/HER MUST HAVE MATERIALLY AFFECTED HIS/HER
SETTLEMENT WITH THE DEBTOR.
BY INITIALING BELOW, HOTEL KNOWINGLY AND VOLUNTARILY
WAIVES THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542
SOLELY IN CONNECTION W1Td__r13 _WAIVERS AND RELEASES OF
THIS SECTION 8.
y`~- 1 otel
7
61147.80013131527088.2 EXHIBIT A - Page 20 of 25
9.2 Additionally, Hotel shall indemnify, defen&with counselireasonably acceptable to
the City and Hotel and hold harmless the City against any claims puisuant to California Labor
Code Section 1781 arising from this Agreement or the construction, installation or maintenance
of any improvements on the Property, in accordance with the terms of Section 8 of this
Agreement. The Parties agree that representation by the City Attorney's office acceptable.
9.3 Notwithstanding any other provision of this Agreement, the City shall not be
under any duty to monitor or ensure the cbmpliance of Hotel with any State of California labor
laws, including, without limitation, prevailing wage laws.
10. Miscellaneous Provisions.
10.1 Transfer or Asst moment. Hotel shall not transfer or assign this Agreement without
prior written approval by the City. Approval of any such transfer or assignment shall be at the
sole discretion of the City, provided that, as the parties acknowledge 'that Hotel will likely
monetize this Agreement as part of its project financing City shall not unreasonably withhold,
condition or delay its consent to a pledge or assignment of this Agreement (or rights under this
Agreement) as part of the capital financing for the project. Such financing approval may be
granted by the City Manager without further action of the City Council.
10.2 Interest. of Members of City. No member of the City Council of City and no other
officer, employee or agent of the City who exercises any functions or responsibilities in
connection with the carrying out of the City's work shall have any personal interest, direct or
indirect, in this Agreement.
10.3 Goventing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, to the jurisdiction of which the Parties hereto
submit.
10.4 Time of the hssence. Time is of the essence of each and every provision of this
Agreement.
10.5 Notices. Notices or other communications given under this Agreement shall be in
writing and shall be served personally or transmitted by first class mail, postage prepaid. Notices
shall be deemed received either at the time of actual receipt or, if mailed in accordance herewith,
on the third (3rd) business day after mailing, whichever occurs first. Notices shall be directed to
the :parties at the following addresses or at such other addresses as the parties may indicate by
notice:
City: City of San Juan Capistrano
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
Attention: City Manager
Hotel: South Coast Investors II, LLC
31866 Camino Capistrano
San Juan Capistrano, CA 92675
61147.800031373065.14
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EXHIBIT A - Page 21 of 25
(949) 496-1316
Attention: Dan Friess
With Copy to: Mission Commercial Properties, Inc.
31866 Camino Capistrano
San Juan Capistrano, CA 92675
(949)496-1316
Attention: Jake Griffith
10.6 1-lead'uras. The titles and headings of the various sections of this Agreement are
intended solely for reference and are not intended to explain, modify or place any interpretation
upon any provision of this Agreement.
10.7 Scti:erability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity without invalidating the remainder of
such or the remaining provisions of this. Agreement.
10.8 Waiver. No waiver of any provision of this Agreement shall be deemed, or shall
constitute, a waiver of any other provision, whether or not similar, nor shall any waiver
constitute a continuing waiver. No waiver shall be binding unless executing in writing by the
party making the waiver.
10.9 Number and Gender. As used in this Agreement, the masculine, feminine or
neutral gender, and the singular or plural number, shall each include the others whenever the
context so indicates or requires.
10.10 Further 'Assurances. The parties shall execute, acknowledge, file or record such
other instruments and statements and shall take such additional action as may be necessary to
carry out the purpose and intent of this Agreement.
10.11 Bindilt r Effect. This Agreement shall be binding upon and inure to the benefit of
the Parties' respective heirs, legal representatives, successors and assigns.
10.12 GutireAgreement. This Agreement constitutes the entire agreement between the
Parties and supersedes all prior or contemporaneous agreements, representations, warranties and
understandings of the parties concerning the subject matter contained herein, written or oral. No
change, modification, addendum or amendment to any provision of this Agreement shall be valid
unless executed in writing by each Party hereto.
10.13 Attorneys' gees. In the event of any litigation arising out of this Agreement, the
prevailing Party in such action, or the non -dismissing Party where the dismissal occurs -other
than by reason of a settlement, shall be entitled to recover its reasonable costs and expenses,
including, without limitation, reasonable attorneys' fees and costs paid, or incurred in good faith.
The "prevailing party," for purposes of this Agreement, shall be deemed to be that Party who
obtains substantially the result sought, whether by settlement, dismissal or judgment.
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EXHIBIT A - Page 22 of 25
10.14 Amendn3ent. This Agreement may be amended only
signed by both City and the Hotel.
61147.80002131323065.14
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[signatures on followingpage]
10
by a .written. instrument
EXHIBIT A - Page 23 of 25
Signature Page
to
Transient Occupancy Taxes
Revenue Sharing Agreement
IN WITNESS WHEREOF, the parties hereto have executed this instrument as of the day
and year first above written.
CITY:
CITY OF SAN JUAN CAPISTRANO,
a California municipal corporation
LE
Benjamin Siegel
City Manager
Attest:
By:
Maria Morris
City Clerk
Approved as to form:
Best Best & Krieger LLP
0
City Attorney
HOTEL:
SOUTH COAST INVESTORS II, LLC,
a limited liability company
By: RIVENDELL LAND COMPANY, INC.
11
61147.8001331527088.2 EXHIBIT A - Page 24 of 25
Signature Page
to
Transient Occupancy Taxes
Revenue Sharing Agreement
IN WITNESS WHEREOF, the parties hereto have executed this instrument as of the day
and year first above written.
CITY:
CITY OF SAN JUAN CAPISTRANO,
a California municipal corpoipoon
By:
City
Attest:
By: r iFo
Aria k
City Clerk
Approved as to form:
Best Best & Krieger LLP
By:
City Attorney
61147.80002X31323065.14
10/24/18
II
IiOTEL:
SOUTH COAST INVESTORS II, LLC,
a limited liability company
Un
[NAME]
[TITLE]
EXHIBIT A - Page 25 of 25
COST OF SERVICES
NXI
We estimate the cost of services to be as follows:
Procedures
Total
Hours
Blended
Rate
Total Fees
Planning
s
Altana eerr
I 9 �.
Super visor ;5
s
Finalize procedures and project timeline with client
8
$
300
$
2,400
Documentation per AICPA standards
8
$
170
$
1,360
Coordinate procedures and document requests
8
$
215
$
1,720
Fieldwork
Interviews and walkthroughs
12
$
250
$
3,000
Detailed payment application review
48
$
165
$
7,920
Project contract and budget review
20
$
240
$
4,800
Project management reports review
10
$
270
$
2,700
Report Issuance •
40
$
215
$
8,600
Total - 1
154
$ 32,500
Total estimated hours and fees can be updated upon review and finalization of procedures with the City.
Our plan is based on the assumption that the records will be in good order and there should be
knowledgeable individuals available to assist us in retrieving documents, answer questions (or refer
us to people who will be able to answer questions). We should have reasonable access to key project
members and items that we believe are needed to complete our work. Fees are inclusive of all direct
and indirect costs, including all out-of-pocket expenses.
The following hourly rates will be used as a basis for attestation costs that are outside the scope of
services listed in the RFP:
g. Position m} , 1
Standard -Hou Rate
Senior Advisor
Parfner ��
s
Altana eerr
I 9 �.
Super visor ;5
s
Page 15
EXHIBIT B - Page 1 of 1