12-0918_MACIAS, GINI & O'CONNELL_Personal Services AgreementPERSONAL SERVICES AGREEMENT
THIS AGREEMENT is made, entered into, and shall become effective this 18th day of
September, 2012, by and between the Successor Agency to the San Juan Capistrano
Community Redevelopment Agency (hereinafter referred to as the "Successor Agency")
and Macias, Gini & O'Connell, LLP (hereinafter referred to as the "Consultant").
RECITALS:
WHEREAS, Successor Agency desires to retain the services of Consultant
regarding the Successor Agency's proposal to provide due diligence review services for the
former redevelopment agency's non- housing funds as required by California Health and
Safety Code Section 34179.5; and
WHEREAS, Consultant is qualified by virtue of experience, training, education and
expertise to accomplish such services.
NOW, THEREFORE, Successor Agency and Consultant mutually agree as follows:
Section 1. Scope of Work.
The scope of work to be performed by the Consultant shall consist of those tasks as
set forth in Exhibit "A," attached and incorporated herein by reference. To the extent that
there are any conflicts between the provisions described in Exhibit "A" and those provisions
contained within this Agreement, the provisions in this Agreement shall control.
Section 2. Term.
This Agreement shall commence on the effective date and shall terminate, and all
services required hereunder shall be completed, no later than December 15, 2012.
Section 3. Compensation.
3.1 Amount.
Total compensation for the services, including any and all out-of-pocket
costs, shall not exceed $24,700 total.
3.2 Method of Payment.
Subject to Section 3.1, Consultant shall submit monthly invoices based on
total services which have been satisfactorily completed for such monthly period. The
Successor Agency will pay monthly progress payments based on approved invoices in
accordance with this Section.
3.3 Records of Expenses.
Consultant shall keep complete and accurate records of all costs and
expenses incidental to services covered by this Agreement. These records will be made
available at reasonable times to the Successor Agency. Invoices shall be addressed as
provided for in Section 16 below.
Section 4. Independent Contractor.
It is agreed that Consultant shall act and be an independent contractor and not an
agent or employee of the Successor Agency, and shall obtain no rights to any benefits
which accrue to Agency's employees.
Section 5. Limitations Upon Subcontracting and Assignment.
The experience, knowledge, capability and reputation of Consultant, its principals
and employees were a substantial inducement for the Successor Agency to enter into this
Agreement. Consultant shall not contract with any other entity to perform the services
required without written approval of the Successor Agency. This Agreement may not be
assigned, voluntarily or by operation of law, without the prior written approval of the
Successor Agency. If Consultant is permitted to subcontract any part of this Agreement by
Successor Agency, Consultant shall be responsible to the Successor Agency for the acts
and omissions of its subcontractor as it is for persons directly employed. Nothing
contained in this Agreement shall create any contractual relationships between any
subcontractor and Successor Agency. All persons engaged in the work will be considered
employees of Consultant. Successor Agency will deal directly with and will make all
payments to Consultant.
Section 6. Changes to Scope of Work.
For extra work not part of this Agreement, a written authorization from Successor
Agency is required prior to Consultant undertaking any extra work. In the event of a
change in the Scope of Work provided for in the contract documents as requested by the
Successor Agency, the Parties hereto shall execute an addendum to this Agreement
setting forth with particularity all terms of the new agreement, including but not limited to
any additional Consultant's fees.
Section 7. Familiarity with Work and/or Construction Site.
By executing this Agreement, Consultant warrants that: (1) it has investigated the
work to be performed; (2) if applicable, it has investigated the work site(s), and is aware of
all conditions there; and (3) it understands the facilities, difficulties and restrictions of the
work to be performed under this Agreement. Should Consultant discover any latent or
unknown conditions materially differing from those inherent in the work or as represented
by Successor Agency, it shall immediately inform the Successor Agency of this and shall
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not proceed with further work under this Agreement until written instructions are received
from the Successor Agency.
Section 8. Time of Essence.
Time is of the essence in the performance of this Agreement.
Section 9. Compliance with Law.
Consultant shall comply with all applicable laws, ordinances, codes and regulations
of federal, state and local government.
Section 10. Conflicts of Interest.
Consultant covenants that it presently has no interest and shall not acquire any
interest, direct or indirect, which would conflict in any manner or degree with the
performance of the services contemplated by this Agreement. No person having such
interest shall be employed by or associated with Consultant.
Section 11. Copies of Work Product.
At the completion of the work, Consultant shall have delivered to Successor Agency
at least one (1) copy of any final report issued will be submitted to the SuccessorAgency in
reproducible format, or in the format otherwise approved by the Successor Agency in
writing.
Section 12. Ownership of Documents.
All reports, information, data and exhibits prepared or assembled by Consultant in
connection with the performance of its services pursuant to this Agreement are confidential
to the extent permitted by law, and Consultant agrees that they shall not be made available
to any individual or organization without prior written consent of the Successor Agency.
The Successor Agency acknowledges such documents are instruments of Consultant's
professional services.
Section 13. Indemnity.
To the fullest extent permitted by law, Consultant agrees to protect, defend, and
hold harmless the Successor Agency and its elective and appointive boards, officers,
agents, and employees from any and all claims, liabilities, expenses, or damages of any
nature, including attorneys' fees, for injury or death of any person, or damages of any
nature, including interference with use of property, arising out of, or in any way connected
with the negligence, recklessness and/or intentional wrongful conduct of Consultant,
Consultant's agents, officers, employees, subcontractors, or independent contractors hired
by Consultant in the performance of the Agreement. The only exception to Consultant's
responsibility to protect, defend, and hold harmless the Successor Agency, is due to the
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negligence, recklessness and/or wrongful conduct of the Successor Agency, or any of its
elective or appointive boards, officers, agents, or employees.
This hold harmless agreement shall apply to all liability regardless of whether any
insurance policies are applicable. The policy limits do not act as a limitation upon the
amount of indemnification to be provided by Consultant.
Section 14. Insurance.
On or before beginning any of the services or work called for by any term of this
Agreement, Consultant, at its own cost and expense, shall carry, maintain for the duration
of the agreement, and provide proof thereof that is acceptable to the Successor Agency,
the insurance specified below with insurers and under forms of insurance satisfactory in all
respects to the Successor Agency. Consultant shall not allow any subcontractor to
commence work on any subcontract until all insurance required of the Consultant has also
been obtained for the subcontractor. Insurance required herein shall be provided by
Insurers in good standing with the State of California and having a minimum Best's Guide
Rating of A- Class VII or better.
14.1 Comprehensive General Liability.
Throughout the term of this Agreement, Consultant shall maintain in full force
and effect Comprehensive General Liability coverage in an amount not less than one
million dollars per occurrence ($1,000,000.00), combined single limit coverage for risks
associated with the work contemplated by this agreement. If a Commercial General
Liability Insurance form or other form with a general aggregate limit is used, either the
general aggregate limit shall apply separately to the work to be performed under this
agreement or the general aggregate limit shall be at least twice the required occurrence
limit.
14.2 Comprehensive Automobile Liability.
Throughout the term of this Agreement, Consultant shall maintain in full force
and effect Comprehensive Automobile Liability coverage, including owned, hired and non -
owned vehicles in an amount not less than one million dollars per occurrence
($1,000,000.00).
14.3 Workers' Compensation.
If Consultant intends to employ employees to perform services under this
Agreement, Consultant shall obtain and maintain, during the term of this Agreement,
Workers' Compensation Employer's Liability Insurance in the statutory amount as required
by state law.
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14.4 Proof of Insurance Requirements/Endorsement.
Prior to beginning any work under this Agreement, Consultant shall submit
the insurance certificates, including the deductible or self -retention amount, and an
additional insured endorsement naming Successor Agency, its officers, employees, agents,
and volunteers as additional insured as respects each of the following: Liability arising out
of activities performed by or on behalf of Consultant, including the insured's general
supervision of Consultant; products and completed operations of Consultant; premises
owned, occupied or used by Consultant; or automobiles owned, leased, hired, or borrowed
by Consultant. The coverage shall contain no special limitations on the scope of protection
afforded Successor Agency, its officers, employees, agents, or volunteers.
14.5 Errors and Omissions Coverage
Throughout the term of this Agreement, Consultant shall maintain Errors and
Omissions Coverage (professional liability coverage) in an amount of not less than One
Million Dollars ($1,000,000). Prior to beginning any work under this Agreement, Consultant
shall submit an insurance certificate to the Successor Agency's General Counsel for
certification that the insurance requirements of this Agreement have been satisfied.
14.6 Notice of Cancellation/Termination of Insurance.
The above policy/policies shall not terminate, nor shall they be cancelled, nor
the coverages reduced, until after thirty (30) days' written notice is given to Successor
Agency, except that ten (10) days' notice shall be given if there is a cancellation due to
failure to pay a premium.
14.7 Terms of Compensation.
Consultant shall not receive any compensation until all insurance provisions
have been satisfied.
14.8 Notice to Proceed.
Consultant shall not proceed with any work under this Agreement until the
Successor Agency has issued a written "Notice to Proceed" verifying that Consultant has
complied with all insurance requirements of this Agreement.
Section 15. Termination.
Successor Agency shall have the right to terminate this Agreement without cause by
giving thirty (30) days' advance written notice of termination to Consultant.
In addition, this Agreement may be terminated by any party for cause by providing
ten (10) days' notice to the other party of a material breach of contract. If the other party
does not cure the breach of contract, then the agreement may be terminated subsequent
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to the ten (10) day cure period.
Section 16. Notice.
All notices shall be personally delivered or mailed to the below listed addresses, or
to such other addresses as may be designated by written notice. These addresses shall
be used for delivery of service of process:
To Successor Agency: City of San Juan Capistrano
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
Attn: Cynthia Russell, Finance Officer
To Consultant: Macias, Gini & O'Connell, LLP
4675 MacArthur Court, Suite 600
Newport Beach, CA 92660
Attn.: Katherine V. Lai
Section 17. Attorneys' Fees.
If any action at law or in equity is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which he may be entitled.
Section 18. Dispute Resolution.
In the event of a dispute arising between the parties regarding performance or
interpretation of this Agreement, the dispute shall be resolved by binding arbitration under
the auspices of the Judicial Arbitration and Mediation Service ("JAMS").
Section 19. Entire Agreement.
This Agreement constitutes the entire understanding and agreement between the
parties and supersedes all previous negotiations between them pertaining to the subject
matter thereof.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
APPROVER AS TO,FORM:
Harts Van Ligten, Agfncy Attorney
CITY OF SAN JUAN CAPISTRANO
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CONSULTANT
By.4#�OLVJ
a herine V. Lai, Partner
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September 5, 2012
Cindy Russell
Chief Financial Officer/City Treasurer
Successor Agency to the Community Redevelopment Agency
of the City of San Juan Capistrano, California
San Juan Capistrano, California
Excluding Low/Mod
We are pleased to present our understanding of the nature and limitations of the services we are to provide
for the Successor Agency to the Community Redevelopment Agency of the City of San Juan Capistrano,
California (Successor Agency), regarding the "Due Diligence Review" of all other funds of the Successor
Agency combined, excluding the Low and Moderate Income Housing Fund(s), required under Section
34179.5 of the Health and Safety Code (Code). The Due Diligence Review of the Low and Moderate
Income Housing Fund(s) (Low/Mod Fund) of the Successor Agency, also required under Code Section
34179.5, will be covered under a separate engagement letter.
We will apply agreed-upon procedures on all other funds of the Successor Agency combined, excluding
the Low/Mod Fund, which the Successor Agency, the California State Controller's Office (SCO), and the
California State Department of Finance (DOF) (collectively referred to as the Specified Parties) have
specified, as listed in Attachment A, solely to assist the Specified Parties in determining the amount of
cash and cash equivalents available for allocation to taxing entities, as prescribed in Section 34179.5 of
the Code. Our engagement to apply agreed-upon procedures will be conducted in accordance with
attestation standards . established by the American Institute of Certified Public Accountants. The
sufficiency of the procedures is solely the responsibility of those parties specified in the report.
Consequently, we make no representation regarding the sufficiency of the procedures, either for the
purpose for which this report has been requested, or for any other purpose. If, for any reason, we are
unable to complete the procedures, we will describe any restrictions on the performance of the procedures
in our report, or will not issue a report as a result of this engagement.
Because the agreed-upon procedures do not constitute an examination, we will not express an opinion on
the amount of cash and cash equivalents available for allocation to taxing entities or other financial
information presented. In addition, we have no obligation to perform any procedures beyond those
agreed-upon procedures.
We will submit a report listing the procedures performed and our findings on all other funds of the
Successor Agency combined, excluding the Low/Mod Fund. This report is intended solely for the use of
the Specified Parties. Our report will contain a paragraph indicating that had we performed additional
procedures, other matters might have come to our attention that would have been reported to you.
The Successor Agency is responsible for determining the amount of cash and cash equivalents available
for allocation to taxing entities in accordance with the Section 34179.5 of the Code. The criteria and
attached procedures to be performed on all other funds of the Successor Agency combined, excluding the
Low/Mod Fund, are based on the requirements under Section 34179.5 of the Code, as interpreted by the
SCO and DOF. The Specified Parties have determined that such criteria are appropriate for purposes of
satisfying the requirements of Section 34179.5 of the Code. The Successor Agency is also responsible for
making all management decisions and performing all management functions.
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Katherine V. Lai is the engagement partner and is responsible for supervising the engagement and signing
the report or authorizing another individual to sign it.
We plan to begin our procedures for all other funds of the Successor Agency combined, excluding the
Low/Mod Fund, in November 2012, and to issue the report for these procedures by December 15, 2012.
At the conclusion of this engagement, we will require a representation letter from management of the
Successor Agency that, among other things, will confirm management's responsibility for the
presentation of the amount of cash and cash equivalents available for allocation to taxing entities.
Our fees for the services noted will be based on the level of effort to complete at our standard hourly rates.
For the procedures to be performed on all other funds of the Successor Agency combined, excluding the
Low/Mod Fund, and the related report, we estimate that our fees for these services will not exceed
$24,700. A schedule of our estimated fees is summarized in Attachment B. The fee estimate is based on
anticipated cooperation from your personnel and the assumption that unexpected circumstances will not
be encountered during the engagement. If significant additional time is necessary, we will discuss it with
you and arrive at a new fee estimate before we incur the additional costs.
Our invoices for these fees will be rendered each month as work progresses and are payable upon
presentation. In accordance with our firm policies, work may be suspended if your account becomes 60
days or more past due and will not be resumed until your account is paid in full. If we elect to terminate
our services for nonpayment, our engagement will be deemed to have been completed upon written
notification of termination, even if we have not completed our report. You will be obligated to
compensate us for all time expended and to reimburse us for all out -or -pocket expenditures through the
date of termination.
We appreciate the opportunity to assist you and believe this letter accurately summarizes the significant
terns of our engagement. If you have any questions, please let us know. If you agree with the terms of
our engagement as described in this letter, please sign the enclosed copy and return it to us. If the need for
additional procedures arises, our agreement with you will need to be revised. It is customary for us to
enumerate these revisions in an addendum to this letter. If additional specified parties of the report are
added, we will require that they acknowledge in writing their responsibility for the sufficiency of
procedures.
Very truly yours,
MACIAS GINI & O'CONNELL LLP
V
Katherine V. Lai, CPA
Partner
EXHIBIT A
RESPONSE:
This letter correctly sets forth the understanding regarding the procedures to be performed on all other
funds of the Successor Agency to the Community Redevelopment Agency of the City of San Juan
Capistrano, California, combined, excluding the Low/Mod Fund.
Title:
Date:
EXHIBIT A
Attachment A
Page: 1
List of Agreed -Upon Procedures for Due Diligence Review
of All Other Funds of the Successor Agency,
Excluding the Low and Moderate Income Housing Fund(s)
General information regarding these procedures:
1. The procedures associated with Sections 34179.5(c)(1) through 34179.5(c)(3) and Sections
34179.5(c)(5) through 34179.5(c)(6) are to be applied to all other funds of the Successor Agency
combined [(excluding the Low and Moderate Income Housing Fund) Low/Mod Fund].
2. The due date for the report associated with all other funds of the Successor Agency combined,
excluding the Low/Mod Fund, is December 15, 2012.
3. Because the procedures required by Section 34179.5(c)(4) pertain to the Successor Agency as a
whole, these procedures should be addressed in the report that is due on December 15, 2012.
Fiscal year references below refer to fiscal years ending on June 30. This language should be modified for
'those agencies that have a different fiscal year-end.
For purposes of the procedures below and the related exhibits, the amount of the assets presented should
be based upon generally accepted accounting principles (GAAP), unless otherwise noted.
To the extent the procedures listed below are duplicative to the agreed upon procedures that were
performed pursuant to HSC 34182 (a)(1), it is acceptable to obtain and use information from the HSC
34182 (a)(1) procedures for purposes of this due diligence review without having to re -perform the
procedures. When this is done, the due diligence report should refer to the report that was issued for the
agreed upon procedures performed under HSC 34182 (a)(1).
Certain assets may qualify as a deduction under more than one category of deduction. In such cases, care
should be taken to ensure that such assets have been included as a deduction in the summary schedule
only once.
Citation:
34179.5(c)(1) The dollar value of assets transferred from the former redevelopment agency to the
successor agency on or about February 1, 2012.
Procedure:
Obtain from the Successor Agency a listing of all assets that were transferred from the former
redevelopment agency to all other funds of the Successor Agency, excluding the Low/Mod Fund, on
February 1, 2012. Agree the amounts on this listing to account balances established in the accounting
records of the Successor Agency. Identify in the Agreed -Upon Procedures (AUP) report the amount
of the assets transferred to all other funds of the Successor Agency, excluding the Low/Mod Fund, as
of that date.
Citation:
34179.5(c)(2) The dollar value of'assets and cash and cash equivalents transferred after January 1, 2011,
through June 30, 2012, by the redevelopment agency or the successor agency to the city, county, or city
and county that.formed the redevelopment agency and the purpose of each transfer. The review shall
provide documentation ofany enforceable obligation that required the transfer.
Attachment A
Page: 2
Procedures:
If the State Controller's Office has completed its review of transfers from all other funds of the
former redevelopment agency or the Successor Agency, excluding the Low/Mod Fund, required
under both Sections 34167.5 and 34178.8 and issued its report regarding such review, attach a copy of
that report as an exhibit to the AUP report. If this has not yet occurred, perform the following
procedures:
A. Obtain a listing prepared by the Successor Agency of transfers (excluding payments for goods
and services) from all other funds of the former redevelopment agency, excluding the Low/Mod
Fund, to the city, county, or city and county that formed the redevelopment agency for the period
from January 1, 2011 through January 31, 2012. For each transfer, the Successor Agency should
describe the purpose of the transfer and describe in what sense the transfer was required by one of
the Agency's enforceable obligations or other legal requirements. Provide this listing as an
attachment to the AUP report.
B. Obtain a listing prepared by the Successor. Agency of transfers (excluding payments for goods
and services) from all other funds of the Successor Agency, excluding the Low/Mod Fund, to the
city, county, or city and county that formed the redevelopment agency for the period from
February 1, 201,2 through June 30, 2012. For each transfer, the Successor Agency should describe
the purpose of the transfer and describe in what sense the transfer was required by one of the
Agency's enforceable obligations or other legal requirements. Provide this listing as an
attachment to the AUP report.
C. For each transfer, obtain the legal document that formed the basis for the enforceable obligation
that required any transfer. Note in the AUP report the absence of any such legal document or the
absence of language in the document that required the transfer.
Citation:
34179.5(c)(3) The dollar value of any cash or cash equivalents transferred after January 1, 2011,
through June 30, 2012, by the redevelopment agency or the successor agency to any other public agency
or private party and the purpose of each transfer. The review .shall provide documentation of any
enforceable obligation that required the transfer.
Procedures:
3. If the State Controller's Office has completed its review of transfers from all other funds of the
former redevelopment agency or the Successor Agency, excluding the Low/Mod Fund, required
under both Sections 34167.5 and 34178.8 and issued its report regarding such review, attach a copy of
that report as an exhibit to the AUP report. If this has not yet occurred, perform the following
procedures:
A. Obtain a listing prepared by the Successor Agency of transfers (excluding payments for goods
and services) from all other funds of the forner redevelopment agency, excluding the Low/Mod
Fund, to any other public agency or to private parties for the period from January 1, 2011 through
January 31, 2012. For each transfer, the Successor Agency should describe the purpose of the
transfer and describe in what sense the transfer was required by one of the Agency's enforceable
obligations or other legal requirements. Provide this listing as an attachment to the AUP report.
B. Obtain a listing prepared by the Successor Agency of transfers (excluding payments for goods
and services) from all other funds of the Successor Agency, excluding the Low/Mod Fund, to any
other public agency or private parties for the period from February 1, 2012 through June 30,
2012. For each transfer, the Successor Agency should describe the purpose of the transfer and
10-011: UU1,
Attachment A
Page: 3
describe in what sense the transfer was required by one of the Agency's enforceable obligations
or other legal requirements. Provide this listing as an attachment to the AUP report.
C. For each transfer, obtain the legal document that formed the basis for the enforceable obligation
that required any transfer. Note in the AUP report the absence of any such legal document or the
absence of language in the document that required the transfer.
Citation:.
34179.5(c)(4) The review shall provide expenditure and revenue accounting information and identify
transfers and funding sources for the 2010-11 and 2011-12,fiscal years that reconciles balances, assets,
and liabilities of the successor agency on June 30, 2012 to those reported to the Controller for the 2009-
10 fiscal year.
Procedures:
4. Perform the following procedures:
A. Obtain from the Successor Agency a summary of the financial transactions of the Redevelopment
Agency and the Successor Agency in the format set forth in the attached schedule for the fiscal
periods indicated 'in the schedule. For purposes of this summary, the financial transactions should
be presented using the modified accrual basis of accounting. End of year balances for capital
assets (in total) and long-term liabilities (in total) should be presented at the bottom of this
summary schedule for information purposes.
B. Ascertain that for each period presented, the total of revenues, expenditures, and transfers
accounts fully for the changes in equity from the previous fiscal period.
C. Compare amounts in the schedule relevant to the fiscal year ended June 30, 2010 to the state
controller's report filed for the Redevelopment Agency for that period.
D. Compare amounts in the schedule for the other fiscal periods presented to account balances in the
accounting records or other supporting schedules. Describe in the report the type of support
provided for each fiscal period.
Citation:
34179.5(c)(5) A separate accounting for the balance for the Low and Moderate Income Housing Fund for
all other funds and accounts combined shall be made asfollows:
(A) A statement of the total value of each fund as of June 30, 2012.
Procedure:
5. Obtain from the Successor Agency a listing of all assets of all other funds of the Successor Agency,
excluding the Low/Mod Fund, as of June 30, 2012, for the report that is due December 15, 2012. The
listing should be attached as an exhibit to the AUP report.
Citation:
34179.5(c)(5)(B) An itemized statement listing any amounts that are legally restricted as to purpose and
cannot be provided to taxing entities. This could include the proceeds of any bonds, grant funds, or funds
provided by other governmental entities that place conditions on their use.
EXHIBIT
Attachment A
Page: 4
Procedures:
6. Obiain from the Successor Agency a listing of asset balances in all other funds of the Successor
Agency, excluding the Low/Mod Fund, held on June 30, 2012, that are restricted for the following
purposes:
A. Unspent bond proceeds:
i. Obtain the Successor Agency's computation of the restricted balances (e.g., total proceeds less
eligible project expenditures, amounts set aside for debt service payments, etc.)
ii. Trace individual components of this computation to related account balances in the accounting
records, or to other supporting documentation (specify in the AUP report a description of such
documentation).
iii. Obtain from the Successor Agency a copy of the legal document that sets forth the restriction
pertaining to these balances. Note in the AUP report the absence of language restricting the use
of the balances that were identified by the Successor Agency as restricted.
B. Grant proceeds and program income that are restricted by third parties:
i. Obtain the Successor Agency's computation of the restricted balances (e.g., total proceeds less
eligible project expenditures).
ii. Trace individual components of this computation to related account balances in the accounting
records, or to other supporting documentation (specify in the AUP report a description of such
documentation).
iii. Obtain from the Successor Agency a copy of the grant agreement that sets forth the restriction
pertaining to these balances. Note in the AUP report the absence of language restricting the use
of the balances that were identified by the Successor Agency as restricted.,
C. Other assets considered to be legally restricted:
i. Obtain the Successor Agency's computation of the restricted balances (e.g., total proceeds less
eligible project expenditures).
ii. Trace individual components of this computation to related account balances in the accounting
records, or to other supporting documentation (specify in the AUP report a description of such
documentation).
iii. Obtain from the Successor Agency a copy of the legal document that sets forth the restriction
pertaining to these balances. Note in the AUP report the absence of language restricting the use
of the balances that were identified by Successor the Agency as restricted.
D. Attach the above mentioned Successor Agency prepared schedule(s) as an exhibit to the AUP
report. For each restriction identified on these schedules, indicate in the report the period of time
for which the restrictions are in effect. If the restrictions are in effect until the related assets are
expended for their intended purpose, this should be indicated in the report.
Citation:
34179.5(c)(5)(C) An itemized statement of the values of any assets that are not cash or cash equivalents.
This may include physical assets, land, records, and equipment. For the purpose of this accounting,
physical assets may be valued at purchase cost or at any recently estimated market value. The statement
shall list separately housing -related assets.
EXHIBIT A
Attachment A
Page: 5
Procedures:
7. Perform the following procedures:
A. Obtain from the Successor Agency a listing of assets in all other funds of the Successor Agency,
excluding the Low/Mod Fund, as of June 30, 2012, that are not liquid or otherwise available for
distribution (such as capital assets, land held for resale, long-term receivables, etc.) and ascertain
if the values are listed at either purchase cost (based on book value reflected in the accounting
records of the Successor Agency) or market value, as recently estimated by the Successor
Agency.
B. If the assets listed at 7(A) are listed at purchase cost, trace the amounts to a previously audited
financial statement (or to the accounting records of the Successor Agency) and note any
differences.
C. For any differences noted in 7(B), inspect evidence of disposal of the asset and ascertain that the
proceeds were deposited into the Successor Agency trust fund. If the differences are due to
additions (this generally is not expected to occur), inspect the supporting documentation and note
the circumstances.
D. If the assets listed at 7(A) are listed at recently estimated market value, inspect the evidence (if
any) supporting the value and note the methodology used. If no evidence is available to support
the value and\or methodology, note the lack of evidence.
Citation:
34179.5(c)(5)(D) An itemized listing of any current balances that are legally or contractually dedicated
or restricted for the funding of an enforceable obligation that. identifies the nature of the dedication or
restriction and the specific enforceable obligation. In addition, the successor agency shall provide a
listing of all approved enforceable obligations that includes a projection of annual spending requirements
to satisfy each obligation and a projection of annual revenues available to fund those requirements. If a
review.finds that future revenues together with dedicated or restricted balances are insufficient to fund
future obligations and thus retention of current balances is required, it shall identify the amount of
current balances necessary for retention. The review shall also detail the projected property tax revenues
and other general purpose revenues to be received by the successor agency, together with both the
amount and timing of the bond debt service payments of the successor agency, for the period in which the
oversight board anticipates the successor agency will have insufficient property tax revenue to pay the
specified obligations.
Procedures:
8. Perform the following procedures:
A. If the Successor Agency believes that asset balances in all other funds of the Successor Agency,
excluding the Low/Mod Fund, need to be retained to satisfy enforceable obligations, obtain from
the Successor Agency an itemized schedule of asset balances (resources) in all other funds of the
Successor Agency, excluding the Low/Mod Fund, as of June 30, 2012, that are dedicated or
restricted for the funding of enforceable obligations and perform the following procedures: The
schedule should identify the amount dedicated or restricted, the nature of the dedication or
restriction, the specific enforceable obligation to which the dedication or restriction relates, and
the language in the legal document that is associated with the enforceable obligation that specifies
the dedication of existing asset balances toward payment of that obligation.
i. Compare all information on the schedule to the legal documents that form the basis for the
dedication or restriction of the resource balance in question.
Attachment A
Page: 6
ii. Compare all current balances to the amounts reported in the accounting records of the
Successor Agency or to an alternative computation.
iii. Compare the specified enforceable obligations to those that were included in the final
Recognized Obligation Payment Schedule approved by the California Department of Finance.
iv. Attach as an exhibit to the report the listing obtained from the Successor Agency. Identify in
the report any listed balances for which the Successor Agency was unable to provide
appropriate restricting language in the legal document associated with the enforceable
obligation.
B. If the Successor Agency believes that future revenues, together with balances dedicated or
restricted to an enforceable obligation, are insufficient to fund future obligation payments and
thus retention of current balances in all other funds of the Successor Agency, excluding the
Low/Mod Fund, is required, obtain from the Successor Agency a schedule of approved
enforceable obligations that includes a projection of the annual spending requirements to satisfy
each obligation and a projection of the annual revenues available to fund those requirements and
perform the following procedures:
i. Compare the enforceable obligations to those that were approved by the California Department
of Finance. Procedures to accomplish this may include reviewing the letter from the California
Department of Finance approving the Recognized Enforceable Obligation Payment Schedules
for the six month period from January 1, 2012 through June 30, 2012 and for the six month.
period July 1, 2012 through December 31, 2012.
ii. Compare the forecasted annual spending requirements to the legal document supporting each
enforceable obligation.
a. Obtain from the Successor Agency its assumptions relating to the forecasted annual
spending requirements and disclose in the report major assumptions associated with the
proj ections.
iii. For the forecasted annual revenues:
a. Obtain from the Successor Agency its assumptions for the forecasted annual revenues and
disclose in the report major assumptions associated with the projections.
C. If the Successor Agency believes that projected property tax revenues and other general purpose
revenues to be received by the Successor Agency are insufficient to pay bond debt service
payments (considering both the timing and amount of the related cash flows), obtain from the
Successor Agency a schedule demonstrating this insufficiency and apply the following
procedures to the information reflected in that schedule.
i. Compare the timing and amounts of bond debt service payments to the related bond debt
service schedules in the bond agreement.
ii. Obtain the assumptions for the forecasted property tax revenues and disclose major
assumptions associated with the projections.
iii. Obtain the assumptions for the forecasted other general purpose revenues and disclose major
assumptions associated with the projections.
D. If procedures A, B, or C were performed, calculate the amount of current unrestricted balances in
all other funds of the Successor Agency, excluding the Low/Mod Fund, necessary for retention in
order to meet the enforceable obligations by performing the following procedures.
EXHIBIT
Attachment A
Page: 7 .
i. Combine the amount of identified current dedicated or restricted balances and the amount of
forecasted annual revenues to arrive at the amount of total resources available to fund
enforceable obligations.
ii. Reduce the amount of total resources available by the amount forecasted for the annual
spending requirements. A negative result indicates the amount of current unrestricted balances
that needs to be retained.
iii. Include the calculation in the AUP report.
Citation:
34179.5(c)(5)(E) An itemized list and analysis of any amounts Qf current balances that are needed to
satisfy obligations that will be placed on the Recognized Obligation Payment Schedules.for the current
fiscal year.
Procedure:
9. If the Successor Agency believes that cash balances in all other funds of the Successor Agency,
excluding the Low/Mod Fund, as of June 30, 2012, need to be retained to satisfy obligations on the
Recognized Obligation Payment Schedule (ROPS) for the period of July 1, 2012 through June 30,
2013, obtain a copy of the final ROPS for the period of July 1, 2012 through December 31, 2012 and
a copy of the final ROPS for the period January 1, 2013 through June 30, 2013. For each obligation
listed on the ROPS, the Successor Agency should add columns identifying (1) any dollar amounts of
existing cash that are needed to satisfy that obligation and (2) the Successor Agency's explanation as
to why the Successor Agency believes that such balances are needed to satisfy the obligation. Include
this schedule as an attachment to the AUP report.
Citation:
34179.5(c)(6) The review shall total the net balances available after deducting the total amounts
described in subparagraphs (B) to (E), inclusive, of paragraph (5). The review shall add any amounts
that were transferred as identified in paragraphs (2) and (3) of subdivision (c) if an enforceable
obligation to make that transfer, did not exist. The resulting sum shall be available for allocation to
affected taxing entities pursuant to Section 34179.6. It shall be a rebuttable presumption that cash and
cash equivalent balances available to the successor agency are available and sufficient to disburse the
amount determined in this paragraph to taxing entities. If the review finds that there are insufficient cash
balances to transfer or that cash or cash equivalents are specifically obligated to the purposes described
in subparagraphs (B), (D), and (E) of paragraph (5) in such amounts that there is insufficient cash to
provide the full amount determined pursuant to this paragraph, that amount shall be demonstrated in an
additional itemized schedule.
Procedures:
10. Include (or present) a schedule detailing the computation of the Balance Available for Allocation to
Affected Taxing Entities from all other funds of the Successor Agency, excluding the Low/Mod
Fund. Amounts included in the calculation should agree to the results of the procedures performed in
each section above. The schedule should also include a deduction to recognize amounts already paid
from all other funds of the Successor Agency, excluding the Low/Mod Fund, to the County Auditor -
Controller on July 12, 2012, as directed by the California Department of Finance. The amount of this
deduction presented should be agreed to evidence of payment. The attached example summary
schedule may be considered for this purpose.
EXHIBIT A
Attachment A
Page: 8
Procedure:
11. Obtain a representation letter from Successor Agency management acknowledging their
responsibility for the data provided to the practitioner and the data presented in the report for all other
funds of the Successor Agency, excluding the Low/Mod Fund, or in any attachments to the report.
Included in the representations should be an acknowledgment that management is not aware of any
transfers (as defined by Section 34179.5) from all other funds of either the former redevelopment
agency or the Successor Agency, excluding the Low/Mod Fund, to other parties for the period from
January 1, 2011 through June 30, 2012, that have not been properly identified in the AUP report and
its related exhibits. Management's refusal to sign the representation letter should be noted in the AUP
report as required by attestation standards.
EXHIBIT A
Estimated Hours and Fees
All Other Funds of the Successor Agency Combined,
Excluding the Low and Moderate Income Housing Fund
Estimated
Hours
15.00
30.00
55.00
35.00
5.00
Estimated
Fees
$ 5,850
6,900
7,425
4,025
500
140.00 $ 24,700
Attachment B
Page 1
Contract
Professional Staff Level
Rates
Partner/Director
$ 390
Manager
230
Senior Associate
135
Associate
115
Clerical
100
Total
Estimated
Hours
15.00
30.00
55.00
35.00
5.00
Estimated
Fees
$ 5,850
6,900
7,425
4,025
500
140.00 $ 24,700
Attachment B
Page 1
PERSONAL SERVICES AGREEMENT
THIS AGREEMENT is made, entered into, and shall become effective this 10th day of
September, 2012, by and between the Successor Agency to the San Juan Capistrano
Community Redevelopment Agency (hereinafter referred to as the "Successor Agency")
and Macias, Gini & O'Connell, LLP (hereinafter referred to as the "Consultant").
RECITALS:
WHEREAS, Successor Agency desires to retain the services of Consultant
regarding the Successor Agency's proposal to provide due diligence review services forthe
former redevelopment agency's low and moderate income housing funds as required by
California Health and Safety Code Section 34179.5; and
WHEREAS, Consultant is qualified by virtue of experience, training, education and
expertise to accomplish such services.
NOW, THEREFORE, Successor Agency and Consultant mutually agree as follows:
Section 1. Scope of Work.
The scope of work to be performed by the Consultant shall consist of those tasks as
set forth in Exhibit 'A" attached and incorporated herein by reference. To the extent that
there are any conflicts between the provisions described in Exhibit "A" and those provisions
contained within this Agreement, the provisions in this Agreement shall control.
Section 2. Term.
This Agreement shall commence on the effective date and shall terminate, and all
services required hereunder shall be completed, no later than October 1, 2012.
Section 3. Compensation.
3.1 Amount.
Total compensation for the services, including any and all out-of-pocket
costs, shall not exceed $19,000 total.
3.2 Method of Payment.
Subject to Section 3.1, Consultant shall submit monthly invoices based on
total services which have been satisfactorily completed for such monthly period. The
Successor Agency will pay monthly progress payments based on approved invoices in
accordance with this Section.
3.3 Records of Expenses.
Consultant shall keep complete and accurate records of all costs and
expenses incidental to services covered by this Agreement. These records will be made
available at reasonable times to the Successor Agency. Invoices shall be addressed as
provided for in Section 16 below.
Section 4. Independent Contractor.
It is agreed that Consultant shall act and be an independent contractor and not an
agent or employee of the Successor Agency, and shall obtain no rights to any benefits
which accrue to Agency's employees.
Section 5. Limitations Upon Subcontracting and Assignment.
The experience, knowledge, capability and reputation of Consultant, its principals
and employees were a substantial inducement for the Successor Agency to enter into this
Agreement. Consultant shall not contract with any other entity to perform the services
required without written approval of the Successor Agency. This Agreement may not be
assigned, voluntarily or by operation of law, without the prior written approval of the
Successor Agency. If Consultant is permitted to subcontract any part of this Agreement by
Successor Agency, Consultant shall be responsible to the Successor Agency for the acts
and omissions of its subcontractor as it is for persons directly employed. Nothing
contained in this Agreement shall create any contractual relationships between any
subcontractor and Successor Agency. All persons engaged in the work will be considered
employees of Consultant. Successor Agency will deal directly with and will make all
payments to Consultant.
Section 6. Changes to Scope of Work.
For extra work not part of this Agreement, a written authorization from Successor
Agency is required prior to Consultant undertaking any extra work. In the event of a
change in the Scope of Work provided for in the contract documents as requested by the
Successor Agency, the Parties hereto shall execute an addendum to this Agreement
setting forth with particularity all terms of the new agreement, including but not limited to
any additional Consultant's fees.
Section 7. Familiarity with Work and/or Construction Site.
By executing this Agreement, Consultant warrants that: (1) it has investigated the
work to be performed; (2) if applicable, it has investigated the work site(s), and is aware of
all conditions there; and (3) it understands the facilities, difficulties and restrictions of the
work to be performed under this Agreement. Should Consultant discover any latent or
unknown conditions materially differing from those inherent in the work or as represented
by Successor Agency, it shall immediately inform the Successor Agency of this and shall
not proceed with further work under this Agreement until written instructions are received
2
from the Successor Agency.
Section 8. Time of Essence.
Time is of the essence in the performance of this Agreement.
Section 9. Compliance with Law.
Consultant shall comply with all applicable laws, ordinances, codes and regulations
of federal, state and local government.
Section 10. Conflicts of Interest.
Consultant covenants that it presently has no interest and shall not acquire any
interest, direct or indirect, which would conflict in any manner or degree with the
performance of the services contemplated by this Agreement. No person having such
interest shall be employed by or associated with Consultant.
Section 11. Copies of Work Product.
At the completion of the work, Consultant shall have delivered to Successor Agency
at least one (1) copy of any final report issued will be submitted to the Successor Agency in
reproducible format, or in the format otherwise approved by the Successor Agency in
writing.
Section 12. Ownership of Documents.
All reports, information, data and exhibits prepared or assembled by Consultant in
connection with the performance of its services pursuant to this Agreement are confidential
to the extent permitted by law, and Consultant agrees that they shall not be made available
to any individual or organization without prior written consent of the Successor Agency.
The Successor Agency acknowledges such documents are instruments of Consultant's
professional services.
Section 13. Indemnity.
To the fullest extent permitted by law, Consultant agrees to protect, defend, and
hold harmless the Successor Agency and its elective and appointive boards, officers,
agents, and employees from any and all claims, liabilities, expenses, or damages of any
nature, including attorneys' fees, for injury or death of any person, or damages of any
nature, including interference with use of property, arising out of, or in any way connected
with the negligence, recklessness and/or intentional wrongful conduct of Consultant,
Consultant's agents, officers, employees, subcontractors, or independent contractors hired
by Consultant in the performance of the Agreement. The only exception to Consultant's
responsibility to protect, defend, and hold harmless the Successor Agency, is due to the
negligence, recklessness and/or wrongful conduct of the Successor Agency, or any of its
3
elective or appointive boards, officers, agents, or employees.
This hold harmless agreement shall apply to all liability regardless of whether any
insurance policies are applicable. The policy limits do not act as a limitation upon the
amount of indemnification to be provided by Consultant.
Section 14. Insurance.
On or before beginning any of the services or work called for by any term of this
Agreement, Consultant, at its own cost and expense, shall carry, maintain for the duration
of the agreement, and provide proof thereof that is acceptable to the Successor Agency,
the insurance specified below with insurers and under forms of insurance satisfactory in all
respects to the Successor Agency. Consultant shall not allow any subcontractor to
commence work on any subcontract until all insurance required of the Consultant has also
been obtained for the subcontractor. Insurance required herein shall be provided by
Insurers in good standing with the State of California and having a minimum Best's Guide
Rating of A- Class VII or better.
14.1 Comprehensive General Liability.
Throughout the term of this Agreement, Consultant shall maintain in full force
and effect Comprehensive General Liability coverage in an amount not less than one
million dollars per occurrence ($1,000,000.00), combined single limit coverage for risks
associated with the work contemplated by this agreement. If a Commercial General
Liability Insurance form or other form with a general aggregate limit is used, either the
general aggregate limit shall apply separately to the work to be performed under this
agreement or the general aggregate limit shall be at least twice the required occurrence
limit.
14.2 Comprehensive Automobile Liability.
Throughout the term of this Agreement, Consultant shall maintain in full force
and effect Comprehensive Automobile Liability coverage, including owned, hired and non -
owned vehicles in an amount not less than one million dollars per occurrence
($1,000,000.00).
14.3 Workers' Compensation.
If Consultant intends to employ employees to perform services under this
Agreement, Consultant shall obtain and maintain, during the term of this Agreement,
Workers' Compensation Employer's Liability Insurance in the statutory amount as required
by state law.
14.4 Proof of Insurance Requirements/Endorsement.
Prior to beginning any work under this Agreement, Consultant shall submit
El
the insurance certificates, including the deductible or self -retention amount, and an
additional insured endorsement naming Successor Agency, its officers, employees, agents,
and volunteers as additional insured as respects each of the following: Liability arising out
of activities performed by or on behalf of Consultant, including the insured's general
supervision of Consultant; products and completed operations of Consultant; premises
owned, occupied or used by Consultant; or automobiles owned, leased, hired, or borrowed
by Consultant. The coverage shall contain no special limitations on the scope of protection
afforded Successor Agency, its officers, employees, agents, or volunteers.
14.5 Errors and Omissions Coverage
Throughout the term of this Agreement, Consultant shall maintain Errors and
Omissions Coverage (professional liability coverage) in an amount of not less than One
Million Dollars ($1,000,000). Prior to beginning any work under this Agreement, Consultant
shall submit an insurance certificate to the Successor Agency's General Counsel for
certification that the insurance requirements of this Agreement have been satisfied.
14.6 Notice of Cancellation/Termination of Insurance.
The above policy/policies shall not terminate, nor shall they be cancelled, nor
the coverages reduced, until after thirty (30) days' written notice is given to Successor
Agency, except that ten (10) days' notice shall be given if there is a cancellation due to
failure to pay a premium.
14.7 Terms of Compensation.
Consultant shall not receive any compensation until all insurance provisions
have been satisfied.
14.8 Notice to Proceed.
Consultant shall not proceed with any work under this Agreement until the
Successor Agency has issued a written "Notice to Proceed" verifying that Consultant has
complied with all insurance requirements of this Agreement.
Section 15. Termination.
Successor Agency shall have the right to terminate this Agreement without cause by
giving thirty (30) days' advance written notice of termination to Consultant.
In addition, this Agreement may be terminated by any party for cause by providing
ten (10) days' notice to the other party of a material breach of contract. If the other party
does not cure the breach of contract, then the agreement may be terminated subsequent
to the ten (10) day cure period.
5
Section 16. Notice.
All notices shall be personally delivered or mailed to the below listed addresses, or
to such other addresses as may be designated by written notice. These addresses shall
be used for delivery of service of process:
To Successor Agency: City of San Juan Capistrano
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
Attn: Cynthia Russell, Finance Officer
To Consultant: Macias, Gini & O'Connell, LLP
4675 MacArthur Court, Suite 600
Newport Beach, CA 92660
Attn.: Katherine V. Lai
Section 17. Attorneys' Fees.
If any action at law or in equity is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which he may be entitled.
Section 18. Dispute Resolution.
In the event of a dispute arising between the parties regarding performance or
interpretation of this Agreement, the dispute shall be resolved by binding arbitration under
the auspices of the Judicial Arbitration and Mediation Service ("JAMS").
Section 19. Entire Agreement.
This Agreement constitutes the entire understanding and agreement between the
parties and supersedes all previous negotiations between them pertaining to the subject
matter thereof.
[SIGNATURE PAGE FOLLOWS]
0
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
ATTEST:
i
a M `
orris, � ge cy cretary
UATOJIOTI--Tewlllm�#�Ae -. MA
Hans Van LigtenrAgency Attorney
CITY OF SAN JUAN°CAPISTRANO
KareA'P". Brust,'Exec`G'tive Director
CONSULTANT
:
BJ5�M�,V
By:
Katherine V. Lai, Partner
7
Sacramento • Walnut Cre Oaktand * i.as Argete JCersts{n City •Ddu fort 1SeaEPr • Sa» Diego
}
September 5, 2012
Cindy Russell
Chief Financial Officer/City Treasurer
Successor Agency to the Community Redevelopment Agency
of the City of San Juan Capistrano, California
San Juan Capistrano, California
mmmgocpa.ccam
We are pleased to present our understanding of the nature and limitations of the services we are to provide
for the Successor Agency to the Community Redevelopment Agency of the City of San Juan Capistrano,
California (Successor Agency), regarding the "Due Diligence Review" of the Low and Moderate Income
Housing Fund(s) of the Successor Agency required under Section 34179.5 of the Health and Safety Code
(Code). The Due Diligence Review of all other funds of the Successor Agency, excluding the Low and
Moderate Income Housing Fund(s), also required under Code Section 34179.5, will be covered under a
separate engagement letter.
We will apply agreed-upon procedures on the Successor Agency's Low and Moderate Income Housing
Fund(s), which the Successor Agency, the California State Controller's Office (SCO), and the California
State Department of Finance (DOF) (collectively referred to as the Specified Parties) have specified, as
listed in Attachment A, solely to assist the Specified Parties in determining the amount of cash and cash
equivalents available for allocation to taxing entities, as prescribed in Section 34179.5 of the Code. Our
engagement to apply agreed-upon procedures will be conducted in accordance with attestation standards
established by the American Institute of Certified Public Accountants. The sufficiency of the procedures
is solely the responsibility of those parties specified in the report. Consequently, we make no
representation regarding the sufficiency of the procedures, either for the purpose for which this report has
been requested, or for any other purpose. If, for any reason, we are unable to complete the procedures, we
will describe any restrictions on the performance of the procedures in our report, or will not issue a report
as a result of this engagement.
Because the agreed-upon procedures do not constitute an examination, we will not express an opinion on
the amount of cash and cash equivalents available for allocation to taxing entities or other financial
information presented. In addition, we have no obligation to perform any procedures beyond those
agreed-upon procedures.
We will submit a report listing the procedures performed and our findings on the Successor Agency's
Low and Moderate Income Housing Fund(s). This report is intended solely for the use of the Specified
Parties. Our report will contain a paragraph indicating that had we performed additional procedures, other
matters might have come to our attention that would have been reported to you.
The Successor Agency is responsible for determining the amount of cash and cash equivalents available
for allocation to taxing entities in accordance with the Section 34179.5 of the Code. The criteria and
attached procedures to be performed on the Successor Agency's Low and Moderate Income Housing
Fund(s) are based on the requirements under Section 34179.5 of the Code, as interpreted by the SCO and
DOF. The Specified Parties have determined that such criteria are appropriate for purposes of satisfying
the requirements of Section 34179.5 of the Code. The Successor Agency is also responsible for making
all management decisions and performing all management functions.
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CA 9581L 94596 CA 946'2 C:A"7 67 C92�"` EXHIBIT Ac,72; l
Katherine V. Lai is the engagement partner and is responsible for supervising the engagement and signing
the report or authorizing another individual to sign it.
We plan to begin our procedures for the Low and Moderate Income Housing Fund of the Successor
Agency on September 10, 2012, and to issue the report for these procedures by October 1, 2012. At the
conclusion of this engagement, we will require a representation letter from management of the Successor
Agency that, among other things, will confirin management's responsibility for the presentation of the
amount of cash and cash equivalents available for allocation to taxing entities.
Our fees for the services noted will be based on the level of effort to complete and our standard hourly
rates. For the procedures to be performed on the Low and Moderate Income Housing Fund(s) of the
Successor Agency, and the related report, we estimate that our fees for these services will not exceed
$19,000. A schedule of our estimated fees is summarized in Attachment B. The fee estimate is based on
anticipated cooperation from your personnel and the assumption that unexpected circumstances will not
be encountered during the engagement. If significant additional time is necessary, we will discuss it with
you and arrive at a new fee estimate before we incur the additional costs.
Our, invoices for these fees will be rendered each month as work progresses and are payable upon
presentation. In accordance with our firm policies, work may be suspended if your account becomes 60
days or more past due and will not be resumed until your account is paid in full. If we elect to terminate
our services for nonpayment, our engagement will be deemed to have been completed upon written
notification of termination, even if we have not completed our report. You will be obligated to
compensate us for all time expended and to reimburse us for all out -or -pocket expenditures through the
date of termination.
We appreciate the opportunity to assist you and believe this letter accurately summarizes the significant
terms of our engagement. If you have any questions, please let us know. If you agree with the terms of
our engagement as described in this letter, please sign the enclosed copy and return it to us. If the need for
additional procedures arises, our agreement with you will need to be revised. It is customary for us to
enumerate these revisions in an addendum to this letter. If additional specified parties of the report are
added, we will require that they acknowledge in writing their responsibility for the sufficiency of
procedures.
Very truly yours,
MACIAS GINI & O'CONNELL LLP
Katherine V. Lai, CPA
Partner
RESPONSE:
This letter correctly sets forth the understanding regarding the procedures to be performed on the Low and
Moderate Income Housing Fund(s) of the Successor Agency to the Community Redevelopment Agency
of the City of San Juan Capistrano, California.
an
Title:
Date:
EXHIBIT
Attachment A
Page: 1
List of Agreed -Upon Procedures for Due Diligence Review
of the Low and Moderate Income Housing Fund(s)
General information regarding these procedures:
The procedures associated with Sections 34179.5(c)(1) through 34179.5(c)(3) and Sections
34179.5(c)(5) through 34179.5(c)(6) are to be applied to the Low and Moderate Income Housing
Fund(s) of the Successor Agency (Low/Mod Fund).
2. The due date for the report associated with the Low/Mod Fund is October 1, 2012.
Fiscal year references below refer to fiscal years ending on June 30. This language should be modified for
those agencies that have a different fiscal year-end.
For purposes of the procedures below and the related exhibits, the amount of the assets presented should
be based upon generally accepted accounting principles (GAAP), unless otherwise noted.
To the extent the procedures listed below are duplicative to the agreed upon procedures that were
performed pursuant to HSC 34182 (a)(1), it is acceptable to obtain and use information from the HSC
34182 (a)(1) procedures for purposes of this due diligence review without having to re -perform the
procedures. When this is done, the due diligence report should refer to the report that was issued for the
agreed upon procedures performed under HSC 34182 (a)(1).
Certain assets may qualify as a deduction under more than one category of deduction. In such cases, care
should be taken to ensure that such assets have been included as a deduction in the summary schedule
only once.
Citation:
34179.5(c)(1) The dollar- value of assets transferred .from the former redevelopment agency to the
successor agency on or about FebYuary 1, 2012.
Procedure:
Obtain from the Successor Agency a listing of all assets that were. transferred from the former
redevelopment agency to the Successor Agency's. Low/Mod Fund on February 1, 2012. Agree the
amounts on this, listing to account balances established in the accounting records of the Successor
Agency. Identify in the Agreed -Upon Procedures (AUP) report the amount of the assets transferred to
the Successor Agency's Low/Mod Fund as of that date.
Citation:
34179.5(c)(2) The dollar value of assets and cash and cash equivalents transferred after January 1, 2011,
through June 30, 2012, by the redevelopment agency or the successor agency to the city, county, or city
and county that.formed the redevelopment agency and the purpose of each transfer. The review shall
provide documentation of any enforceable obligation that required the transfer.
Procedures:
2. If the State Controller's Office has completed its review of transfers from the Low/Mod Fund
required under both Sections 34167.5 and 34178.8 and issued its report regarding such review, attach
a copy of that report as an exhibit to the AUP report. If this has not yet occurred, perform the
following procedures:
EXHIBIT A
Attachment A
Page: 2
A. Obtain a listing prepared by the Successor Agency of transfers (excluding payments for goods
and services) from the former redevelopment agency's Low/Mod Fund to the city, county, or city
and county that fonned the redevelopment agency for the period from January 1, 2011 through
January 31, 2012. For each transfer, the Successor Agency should describe the purpose of the
transfer and describe in what sense the transfer was required by one of the Agency's enforceable
obligations or other legal requirements. Provide this listing as an attachment to the AUP report.
B. Obtain a listing prepared by the Successor Agency of transfers (excluding payments for goods
and services) from the Successor Agency's Low/Mod Fund to the city, county, or city and county
that formed the redevelopment agency for the period from February 1, 2012 through June 30,
2012. For each transfer, the Successor Agency should describe the purpose of the transfer and
describe in what sense the transfer was required by one of the Agency's enforceable obligations
or other legal requirements. Provide this listing as an attachment to the AUP report.
C. For each transfer, obtain the legal document that formed the basis for the enforceable obligation
that required any transfer. Note in the AUP report the absence of any such legal document or the
absence of language in the document that required the transfer.
Citation:
34179.5(c)(3) The dollar value of any cash or cash equivalents transferred after January 1, 2011,
through June 30, 2012, by the redevelopment agency or the successor agency to any other public agency
or private party and the purpose of each transfer. The review shall provide documentation of any
enforceable obligation that required the transfer.
Procedures:
3. If the State Controller's Office has completed its review of transfers from the Low/Mod Fund
required under both Sections 34167.5 and 34178.8 and issued its report regarding such review, attach
a copy of that report as an exhibit to the AUP report. if this has not yet occurred, perform the
following procedures:
A. Obtain a listing prepared by the Successor Agency of transfers (excluding payments for goods
and services) from the. former redevelopment agency's Low/Mod Fund to any other public
agency or to private parties for the period from January 1, 2011 through January 31, 2012. For
each transfer, the Successor Agency should describe the purpose of the transfer and describe in
what sense the transfer was required by one of the Agency's enforceable obligations or other
legal requirements. Provide this listing as an attachment to the AUP report.
B. Obtain a listing prepared by the Successor Agency of transfers (excluding payments for goods
and services) from the Successor Agency's Low/Mod Fund to any other public agency or private
parties for the period from February 1, 2012 through June 30, 2012. For each transfer, the
Successor Agency should describe the purpose of the transfer and describe in what sense the
transfer was required by one of the Agency's enforceable obligations or other legal requirements.
Provide this listing as an attachment to the AUP report.
C. For each transfer, obtain the legal document that formed the basis for the enforceable obligation
that required any transfer. Note in the AUP report the absence of any such legal document or the
absence of language in the document that required the transfer.
EXHIBIT A
Attachment. A
Page: 3
Citation:
34179.5(c)(4) The review shall provide expenditure and revenue accounting information and identify
transfers and funding sources for the 2010-11 and 2011-12 fiscal years that reconciles balances, assets,
and liabilities Qf the successor agency on June 30, 2012 to those reported to the Controller for the 2009-
10 fiscal year.
Procedures:
4. This procedure is not applicable to the report on the Successor Agency's Low/Mod Fund.
Citation:
34179.5(c)(5) A separate accounting for the balance for the Low and Moderate Income Housing Fund, for
all other funds and accounts combined shall be made as follows:
(A) A statement of the total value gf each fund as gfJune 30, 2012.
Procedure:
Obtain from the Successor Agency a listing of all assets of the Low/Mod Fund as of June 30, 2012.
The schedule will include only those assets of the Low/Mod Fund that were held by the Successor
Agency as of June 30, 2012, and will exclude all assets held by the entity that assumed the housing
function previously performed by the former redevelopment agency. Agree the assets so listed to
recorded balances reflected in the accounting records of the Successor Agency. The listings should be
attached as an exhibit to the AUP report.
Citation:
34179.5(c)(.5)(B) An itemized statement listing any amounts that are legally restricted as to purpose and
cannot be provided to taxing entities. This could include the proceeds: of any bonds, grant, funds, or funds
provided by other governmental entities that place conditions on their use.
Procedures:
6. Obtain from the Successor Agency a listing of asset balances in the Low/Mod Fund held on June 30,
2012, that ate restricted for the following purposes: .
A. Unspent bond proceeds:
i. Obtain the Successor Agency's computation of the restricted balances (e.g., total proceeds less
eligible project expenditures, amounts set aside for debt service payments, etc.)
ii. Trace individual components of this computation to related account balances in the accounting
records, or to other supporting documentation (specify in the AUP report a description of such
documentation).
iii. Obtain from the Successor Agency a copy of the legal document that sets forth the restriction
pertaining to these balances. Note in the AUT report the absence of language restricting the use
of the balances that were identified by the Successor Agency as restricted.
B. Grant proceeds and program income that are restricted by third parties:
i. Obtain the Successor Agency's computation of the restricted balances (e.g., total proceeds less
eligible project expenditures).
ii. Trace individual components of this computation to related account balances in the accounting
records, or to other supporting documentation (specify in the AUP report a description of such
documentation).
EXHIBIT A
Attachment A
Page: 4
iii. Obtain from the Successor Agency a copy of the grant agreement that sets forth the restriction
pertaining to these balances. Note in the AUP report the absence of language restricting the use
of the balances that were identified by the Successor Agency as restricted.
C. Other assets considered to be legally restricted:
i. Obtain the Successor Agency's computation of the restricted balances (e.g., total proceeds less
eligible project expenditures).
ii. Trace individual components of this computation to related account balances in the accounting
records, or to other supporting documentation (specify in the AUP report a description of such
documentation).
iii. Obtain from the Successor Agency a copy of the legal document that sets forth the restriction
pertaining to these balances. Note in the AUP report the absence of language restricting the use
of the balances that were identified by Successor the Agency as restricted.
D. Attach the above mentioned Successor Agency prepared schedule(s) as an exhibit to the AUP
report. For each restriction identified on these schedules, indicate in the report the period of time
for which the restrictions are in effect. If the restrictions are in effect until the related assets are
expended for their intended purpose, this should be indicated in the report.
Citation:
34179.5(c)(5)(C) An itemifed statement of the values of ai y assets that are not cash or cash equivalents.
This may include physical assets, land, records, and equipment. For the purpose of this accounting,
physical assets may be valued at purchase cost or at any recently estimated marlret value. The statement
shall list separately housing -related assets.
Procedures:
7. Perform the following procedures:
A. Obtain from the Successor Agency a listing of assets in the Low/Mod Fund as of June 30, 2012,
that are not liquid or otherwise available for distribution (such as capital assets, land held for
resale, long-term receivables, etc.) and ascertain if the values are listed at either purchase cost
(based on book value reflected in the accounting records of the Successor Agency) or market
value as recently estimated by the Successor Agency.
B. If the assets listed at 7(A) are listed at purchase cost, trace the amounts to a previously audited
financial statement (or to the accounting records of the Successor Agency) and note any
differences.
C. For any differences noted in 7(B), inspect evidence of disposal of the asset and ascertain that the
proceeds were deposited into the Successor Agency trust fund. If the differences are due to
additions (this generally is not expected to occur), inspect the supporting documentation and note
the circumstances.
D. If the assets listed at 7(A) are listed at recently estimated market value, inspect the evidence (if
any) supporting the value and note the methodology used. If no evidence is available to support
the value and\or methodology, note the lack of evidence.
EXHIBIT A
Attachment A
Page: 5
Citation:
34179.5(c)(5)(D) An itemized listing of any current balances that are legally or contractually dedicated
or restricted for the funding of an enforceable obligation that identifies the nature of the dedication or
restriction and the specific enforceable obligation. In addition, the successor agency shall provide a
listing of all approved enforceable obligations that includes a projection of annual spending requirements
to satisfy each obligation and a prgjection of annual revenues available to fund those requirements. ff a
review finds that future revenues together with dedicated or restricted balances are insufficient to fund
future obligations and thus retention of current balances is required, it shall identify the amount of
current balances necessary for retention. The review shall also detail the projected property tax revenues
and other general purpose revenues to be received by the successor agency, together with both the
amount and timing of the bond debt service payments of the successor agency, for the period in which the
oversight board anticipates the successor agency will have insufficient property tax revenue to pay the
specified obligations.
Procedures.-
8.
rocedures:8. Perform the following procedures:
A. If the Successor Agency believes that asset balances in the Low/Mod Fund need to be retained to
satisfy enforceable obligations, obtain from the Successor Agency an itemized schedule of asset
balances (resources) in the Low/Mod Fund as of June 30, 2012, that are dedicated or restricted for
the funding of enforceable obligations and perform the following procedures. The schedule
should identify the amount dedicated or restricted, the nature of the dedication or restriction, the
specific enforceable obligation to which the dedication or restriction relates, and the language in
the legal document that is associated with the enforceable obligation that specifies the dedication
of existing asset balances toward payment of that obligation.
i. Compare all information on the schedule to the legal documents that form the basis for the
dedication or restriction of the resource balance in question.
ii. Compare all current balances to the amounts reported in the accounting records of the
Successor Agency or to an alternative computation.
iii. Compare the specified enforceable obligations to those that were included in the final
Recognized Obligation Payment Schedule approved by the California Department of Finance.
iv. Attach as an exhibit to the report the listing obtained from the Successor Agency. Identify in
the report any listed balances for which the Successor Agency was unable to provide
appropriate restricting language in the legal document associated with the enforceable
obligation.
B. If the Successor Agency believes that future revenues, together with balances dedicated or
restricted to an enforceable obligation, are insufficient to fund future obligation payments and
thus retention of current balances in the Low/Mod Fund is- required, obtain from the Successor
Agency a schedule of approved enforceable obligations that includes a projection of the annual
spending requirements to satisfy each obligation and a projection of the annual revenues available
to fund those requirements and perform the following procedures:
i. Compare the enforceable obligations to those that were approved by the California Department
of Finance. Procedures to accomplish this may include reviewing the letter from the California
Department of Finance approving the Recognized Enforceable Obligation Payment Schedules
for the six month period from January 1, 2012 through June 30, 2012 and for the six month
period July 1, 2012 through December 31, 2012.
EXHIBIT A
Attachment A
Page: 6
ii. Compare the forecasted annual spending requirements to the legal document supporting each
enforceable obligation.
a. Obtain from the Successor Agency its assumptions relating to the forecasted annual
spending requirements and disclose in the report major assumptions associated with the
projections.
iii. For the forecasted annual revenues:
a.Obtain from the Successor Agency its assumptions for the forecasted annual revenues and
disclose in the report major assumptions associated with the projections.
C. If the Successor Agency believes that projected property tax revenues and other general purpose
revenues to be received by the Successor Agency are insufficient to pay bond debt service
payments (considering both the timing and amount of the related cash flows), obtain from the
Successor Agency a schedule demonstrating this insufficiency and apply the following
procedures to the information reflected in that schedule.
i. Compare the timing and amounts of bond debt service payments to the related bond debt
service schedules in the bond agreement.
ii. Obtain the assumptions for the forecasted property tax revenues and disclose major
assumptions associated with the projections.
iii. Obtain the assumptions for the forecasted other general purpose revenues and disclose major
assumptions associated with the projections.
D. If procedures A, B, or C were performed, calculate the amount of current unrestricted balances in
the Low/Mod Fund necessary for retention in order to meet the enforceable obligations by
performing the following procedures.
i. Combine the amount of identified current dedicated or restricted balances and the amount of
forecasted annual revenues to arrive at the amount of total resources available to fund
enforceable obligations.
ii. Reduce the amount of total resources available by the amount forecasted for the annual
spending requirements. A negative result indicates the amount of current unrestricted balances
that needs to be -retained.
iii. Include the calculation in the AUP report.
Citation:
34179.5(c)(5)(E) An itemized list and analysis of any amounts of current balances that are needed to
satisfy obligations that will be placed on the Recognized Obligation Payment Schedules for the current.
fiscal year.
Procedure:
9. If the Successor Agency believes that cash balances in the Low/Mod Fund as of June 30, 2012, need
to be retained to satisfy obligations on the Recognized Obligation Payment Schedule (ROPS) for the
period of July 1, 2012 through June 30, 2013, obtain a copy of the final ROPS for the period of July
1, 2012 through December 31, 2012 and a copy of the final ROPS for the period January 1, 2013
through June 30, 2013. For each obligation listed on the ROPS, the Successor Agency should add
columns identifying (1) any dollar amounts of existing cash that are needed to satisfy that obligation
and (2) the Successor Agency's explanation as to why the Successor Agency believes that such
balances are needed to satisfy the obligation. Include this schedule as an attachment to the AUP
report.
EXHIBIT A
Attachment A
Page: 7
Citation:
34179.5(c)(6) The review shall total the net, balances available after deducting the total amounts
described in subparagraphs (B) to (E), inclusive, of paragraph (5). The review shall add any amounts
that were transferred as identified in paragraphs (2) and (3) of subdivision (c) if an enforceable
obligation to make that transfer did not exist. The resulting sum shall be available for allocation to
affected taxing entities pursuant to Section 34179.6. It shall be a rebuttable presumption that cash and
cash equivalent balances available to the successor agency are available and sufficient to disburse the
amount determined in this paragraph to taxing entities. If the review finds that there are insufficient cash
balances to transfer or that cash or cash equivalents are specifically obligated to the purposes described
in subparagraphs (B)., (D), and (E) of paragraph (5) in such amounts that there is insufficient cash to
provide the full amount determined pursuant to this paragraph, that amount shall be demonstrated in an
additional itemized schedule.
Procedures:
10. Include (or present) a schedule detailing the computation of the Balance Available for Allocation to
Affected Taxing Entities from the Low/Mod Fund. Amounts included in the calculation should agree
to the results of the procedures performed in each section above. The schedule should also include a
deduction to recognize amounts already paid from the Low/Mod Fund to the County Auditor -
Controller on July 12, 2012, as directed by the California Department of Finance. The amount of this
deduction presented should be agreed to evidence of payment. The attached example summary
schedule may be considered for this purpose.
Procedure:
ll. Obtain a representation letter from Successor Agency management acknowledging their
responsibility for the data provided to the practitioner and the data presented in the report for the
Low/Mod Fund or in any attachments to the report. Included in the representations should be an
acknowledgment that management is not aware of any transfers (as defined by Section 34179.5) from
the Low/Mod Fund of either the former redevelopment agency or the Successor Agency to other
parties for the period from January ,1, 2011 through June 30, 2012, that have not been properly
identified in the AUP report and its related exhibits. Management's refusal to sign the representation
letter should be noted in the AUP report, as required by attestation standards.
EXHIBIT A
Attachment B
Page 1
EXHIBIT A
Estimated Hours and Fees
Low
and Moderate Income Housing Fund
of the Successor Agency
Contract Estimated
Estimated
Professional Staff Level Rates Hours
Fees
Partner/Director
$ 390 10.00
$ 3,900
Manager
230 25.00
5,750
Senior Associate
135 40.00
5,400
Associate
115 30.00
3,450
Clerical
100 5.00
500
Total
110.00
$ 19,000
EXHIBIT A
32400 PASEO ADELANTO
SAN .JUAN CAPISTRANO, CA 92675
(949) 493-1171
(949) 493-1053 FAx
www. sanj uancapistrano. org
TRANSMITTAL
TO:
Macias, Gini & O'Connell, LLP
Attn: Katherine V. Lai
4675 MacArthur Court, Suite 600
Newport Beach, CA 92660
DATE: September 27, 2012
i
MEMBERS OF THE CITY COUNCIL
JJJ'
�
IAEOAPO RATER
SAM ALLEVATO
LAURA FREESE
EST RUSHED
I96I
LARRY KRAMER
1 6
DEREK REEVE
•
•
JOHN TAYLOR
FROM: Christy Jakl, Deputy City Clerk (949) 443-6310
RE: Personal Services Agreements — (1) Due Diligence Review Services for Low and
Moderate Income Housing Funds (2) Due Diligence Review Services of Non -Housing Funds
Thank you for providing documentation confirming compliance with the terms of the agreement
related to insurance.
Please keep in mind this documentation must remain current with our office during the term of
the agreements. If you have questions related to insurance requirements, please call me at
(949) 443-6310.
If you have questions concerning the agreement, please contact Cindy Russell, Chief Financial
Officer/Treasurer at (949) 443-6301.
Enclosed is an original agreement for your records.
Cc: Cindy Russell, Chief Financial Officer/Treasurer
San Juan Capistrano: Preserving the Past to Enhance the Future
0 Printed on 100% recycled paper