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12-11-2018 CC Rpt 21 COUNCIL AGENDA STAFF REPORT Chino I IiEI� TO: HONORABLE MAYOR AND CITY COUNCIL DATE: DECEMBER 11, 2018 MEMBERS FROM: CITY MANAGER ITEM NO:21 SUBJECT:FINANCIAL ADVISORY SERVICES RECOMMENDATION: 1. Find that the exception to competitive bidding procedures under Chino Hills Municipal Code Section 3.18.050(D) applies because Harrell & Company Advisors, LLC personnel has demonstrated competence, qualifications for the types of services to be performed, and has the experience and knowledge of the City due to a long-standing relationship. 2. Authorize the execution of a three-year agreement with two one-year renewal options with Harrell & Company Advisors, LLC for financial advisory services in an amount not- to-exceed $141,500. 3. Adopt a resolution entitled: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHINO HILLS, CALIFORNIA, ADOPTING A BUDGET AMENDMENT FOR FISCAL YEAR 2018-19 INCREASING THE BUDGET IN VARIOUS FUNDS BY $3,300 FOR DISSEMINATION AGENT SERVICES. BACKGROUND/ANALYSIS: On July 10, 2007, the City Council authorized Agreement No. A07-68 with Harrell & Company Advisors, LLC for financial advisory services. Since that time, the firm has provided a variety of services consisting of financial analysis, assistance with bond issuance and refunding transactions, the preparation of bond official statements, and the preparation of Continuing Disclosure Statements. Due to the long standing relationship, special expertise, and significant knowledge about prior bond issues and other financing mechanisms of the City of Chino Hills, staff recommends finding that the exception to competitive bidding per Chino Hills Municipal Code Section 3.18.050(D) applies, and therefore competitive bidding should be waived. Staff recommends that the City Council authorize the execution of a new agreement to allow for updated terms and a refinement of the scope of services to be provided. A summary of services in the scope of this agreement are as follows: • Consult and provide analysis on potential bond issues and refunding transactions. • Provide guidance and analysis on Bond Calls and other early payment options. • Provide guidance on the financing of programs and projects (current and new). • Assist in developing and maintaining a long-term financial plan for on-going operational costs, current and new programs, and capital improvement projects. • Assist in developing financial condition factors to evaluate the City's financial condition. • Assist in gathering/preparing the SEC required Annual Continuing Disclosure reports. • Act as Dissemination Agent under and pursuant to the existing Continuing Disclosure Agreements for various debt issues. 175/296 The compensation for the new agreement will be $28,300 annually, for a total amount not- to-exceed $141,500 for the total agreement term. ENVIRONMENTAL (CEQA) REVIEW: This proposed action is exempt from review under the California Environmental Quality Act (California Public Resources Code §§ 21000, et seq.; "CEQA") and CEQA regulations (14 California Code Regulations §§ 15000, et seq.) because it does not involve any commitment to a specific project which could result in a potentially significant physical impact on the environment; and constitutes an organizational or administrative activity that will not result in direct or indirect physical changes in the environment. Accordingly, this action does not constitute a "project" that requires environmental review (see specifically 14 CCR § 15378(b)(4-5)). FISCAL IMPACT: The proposed budget amendment will increase the expenditure budget in various funds by a total of $3,300, which will decrease the projected ending fund balance in those same funds. There is no impact to the General Fund with this item. Future agreement costs will be budgeted for in the appropriate fiscal year. REVIEWED BY OTHERS: None. Respectfully Submitted, Recommended By: WIC ler Konradt Bartlam Christy Buhagiar City Manager Finance Director Attachments Agreement Resolution Exhibit No. 1 to Resolution 176/296 AGREEMENT NO. A2018- FOR PROFESSIONAL SERVICES BETWEEN THE CITY OF CHINO HILLS AND HARRELL & COMPANY ADVISORS, LLC FINANCIAL ADVISORY SERVICES THIS AGREEMENT, made and entered into this 11th day of December 2018, between the CITY OF CHINO HILLS, a municipal corporation, hereinafter referred to as "City" and Harrell & Company Advisors, LLC hereinafter referred to as "Consultant." In consideration of the mutual covenants and conditions set forth herein, the parties agree as follows: 1. SCOPE OF SERVICES. Consultant agrees to perform the services set forth in Exhibit A "SCOPE OF SERVICES" attached hereto and made a part hereof. Consultant shall submit its work to the City for its review after completing each phase of the project as described in Exhibit A, or when otherwise requested by the City. Consultant shall, at its own cost, make any revisions of its own work as required by the City and re-do, at its own cost, any work which the City finds unsatisfactory due to Consultant's or subcontractor's errors or omissions. Consultant represents and warrants that it has the qualifications, experience and facilities to properly perform said services in a thorough, competent and professional manner and shall, at all times during the term of this Agreement, have in full force and effect, all licenses required of it by law. Consultant shall begin its services under this Agreement on January 1, 2019. 2. STATUS OF CONSULTANT. Consultant is and shall at all times remain as to the City a wholly independent contractor. The personnel performing the services under this Agreement on behalf of Consultant shall at all times be under Consultant's exclusive direction and control. Neither City nor any of its officers, employees, or agents shall have control over the conduct of Consultant or any of Consultant's officers, employees, or agents except as set forth in this Agreement. Consultant shall not at any time or in any manner represent that it or any of its officers, employees, or agents are in any manner officers, employees, or agents of the City. Consultant shall not incur or have the power to incur any debt, obligation or liability whatsoever against City, or bind City in any manner. Consultant shall not disseminate any information or reports gathered or created pursuant to this Agreement without the prior written approval of City except information or reports required by government agencies to enable Consultant to perform its duties under this Agreement. 3. CONSULTANT'S KNOWLEDGE OF APPLICABLE LAWS. Consultant shall keep itself informed of applicable local, state, and federal laws and regulations which may affect those employed by it or in any way affect the performance of its services pursuant to this Agreement. Consultant shall observe PSA Page 1 of 15 Financial Advisory Services 177/296 and comply with all such laws and regulations affecting its employees. City and its officers and employees, shall not be liable at law or in equity as a result of any failure of Consultant to comply with this section. 4. PERSONNEL. Consultant shall make every reasonable effort to maintain the stability and continuity of Consultant's staff assigned to perform the services hereunder and shall obtain the approval of the City Manager of all proposed staff members performing services under this Agreement prior to any such performance. 5. COMPENSATION AND METHOD OF PAYMENT. Compensation to the Consultant shall be as set forth in Exhibit B attached hereto and made a part hereof. Total compensation shall not exceed $141,500. Payments shall be made within forty-five (45) days after receipt of each invoice as to all undisputed fees. If the City disputes any of Consultant's fees, it shall give written notice to Consultant within 30 days of receipt of an invoice of any disputed fees set forth on the invoice. 6. ADDITIONAL SERVICES OF CONSULTANT. Consultant shall not be compensated for any services rendered in connection with its performance of this Agreement which are in addition to those set forth herein or listed in Exhibit A, unless such additional services are authorized in advance and in writing by the City Manager. Consultant shall be compensated for any additional services in the amounts and in the manner as agreed to by City Manager and Consultant at the time City's written authorization is given to Consultant for the performance of said services. 7. ASSIGNMENT. All services required hereunder shall be performed by Consultant, its employees or personnel under direct contract with Consultant. Consultant shall not assign to any subcontractor the performance of this Agreement, nor any part thereof, nor any monies due hereunder, without the prior written consent of City Manager. 8. FACILITIES AND RECORDS. Consultant shall maintain complete and accurate records with respect to sales, costs, expenses, receipts and other such information required by City that relate to the performance of services under this Agreement. Consultant shall maintain adequate records of services provided in sufficient detail to permit an evaluation of services. All such records shall be maintained in accordance with generally accepted accounting principles and shall be clearly identified and readily accessible. Consultant shall provide free access to the representatives of City or its designees at reasonable times to such books and records, shall give City the right to examine and audit said books and records, shall permit City to make transcripts therefrom as necessary, and shall allow inspection of all work, data, documents, proceedings and activities related to this Agreement. Such records, together with supporting documents, shall be maintained for a period of three (3) years after receipt of final payment. PSA Page 2 of 15 Financial Advisory Services 178/296 9. TERMINATION OF AGREEMENT. This Agreement will terminate on December 31, 2021, unless otherwise extended in advance and in writing by the City Manager for an additional two (2) one-year renewal options. This Agreement may be terminated with or without cause by either party upon 30 days written notice. In the event of such termination, Consultant shall be compensated for non-disputed fees under the terms of this Agreement up to the date of termination. 10. COOPERATION BY CITY. All public information, data, reports, records, and maps as are existing and available to City as public records, and which are necessary for carrying out the work as outlined in the Scope of Services, shall be furnished to Consultant in every reasonable way to facilitate, without undue delay, the work to be performed under this Agreement. 11. OWNERSHIP OF DOCUMENTS. Upon satisfactory completion of, or in the event of termination, suspension or abandonment of, this Agreement, all original maps, models, designs, drawings, photographs, studies, surveys, reports, data, notes, computer files, files and other documents prepared in the course of providing the services to be performed pursuant to this Agreement shall, become the sole property of City. With respect to computer files, Consultant shall make available to the City, upon reasonable written request by the City, the necessary computer software and hardware for purposes of accessing, compiling, transferring and printing computer files. 12. RELEASE OF INFORMATION/CONFLICTS OF INTEREST. (a) All information gained by Consultant in performance of this Agreement shall be considered confidential and shall not be released by Consultant without City's prior written authorization excepting that information which is a public record and subject to disclosure pursuant to the California Public Records Act, Government Code § 6250, et seq. Consultant, its officers, employees, agents or subcontractors, shall not without written authorization from the City Manager or unless requested by the City Attorney, voluntarily provide declarations, letters of support, testimony at depositions, response to interrogatories or other information concerning the work performed under this Agreement or relating to any project or property located within the City. Response to a subpoena or court order shall not be considered "voluntary" provided Consultant gives City notice of such court order or subpoena. If Consultant or any of its officers, employees, consultants or subcontractors does voluntarily provide information in violation of this Agreement, City has the right to reimbursement and indemnity from Consultant for any damages caused by Consultant's conduct, including the City's attorney's fees. Consultant shall promptly notify City should Consultant, its officers, employees, agents or subcontractors be served with any summons, complaint, subpoena, notice of deposition, request for documents, interrogatories, request for admissions or other discovery request, court order or subpoena from any party regarding this Agreement and the work performed thereunder or with respect to any project or property located within the City. City retains the right, but has no obli- gation, to represent Consultant and/or be present at any deposition, hearing or PSA Page 3 of 15 Financial Advisory Services 179/296 similar proceeding. Consultant agrees to cooperate fully with City and to provide City with the opportunity to review any response to discovery requests provided by Consultant. However, City's right to review any such response does not imply or mean the right by City to control, direct, or rewrite said response. (b) Consultant covenants that neither they nor any officer or principal of their firm have any interest in, or shall they acquire any interest, directly or indirectly which will conflict in any manner or degree with the performance of their services hereunder. Consultant further covenants that in the performance of this Agreement, no person having such interest shall be employed by them as an officer, employee, agent, or subcontractor without the express written consent of the City Manager. Consultant further covenants that Consultant has not contracted with nor is performing any services directly or indirectly with any developer(s) and/or property owner(s) and/or firm(s) and/or partnerships owning property in the City or the study area and further covenants and agrees that Consultant and/or its subcontractors shall provide no service or enter into any agreement or agreements with any developer(s) and/or property owner(s) and/or firm(s) and/or partnerships owning property in the City or the study area prior to the completion of the work under this Agreement without the express written consent of the City Manager. 13. DEFAULT. In the event that Consultant is in default of any of the provisions of this Agreement, City shall have no obligation or duty to continue compensating Consultant for any work performed after the date of default and can terminate this Agreement immediately by written notice to the Consultant. 14. INDEMNIFICATION. (a) Consultant represents it is skilled in the professional calling necessary to perform the services and duties agreed to hereunder by Consultant, and City relies upon the skills and knowledge of Consultant. Consultant shall perform such services and duties consistent with the standards generally recognized as being employed by professionals performing similar service in the State of California. (b) Consultant is an independent contractor and shall have no authority to bind City nor to create or incur any obligation on behalf of or liability against City, whether by contract or otherwise, unless such authority is expressly conferred under this agreement or is otherwise expressly conferred in writing by City. City, its elected and appointed officials, officers, agents, employees and volunteers (individually and collectively, "Indemnitees") shall have no liability to Consultant or to any other person for, and Consultant shall indemnify, defend, protect and hold harmless the Indemnitees from and against, any and all liabilities, claims, actions, causes of action, proceedings, suits, damages, judgments, liens, levies, costs and expenses of whatever nature, including reasonable attorneys' fees and disbursements (collectively "Claims"), which the Indemnitees may suffer or incur or to which the Indemnitees may become subject by reason of or arising out of any injury to or death of any person(s), damage to property, loss of use of property, economic loss or otherwise occurring as a result of or allegedly caused by the negligent or wrongful acts or omissions of Consultant, its agents, officers, directors or employees, in performing any of the services under this agreement. PSA Page 4 of 15 Financial Advisory Services 180/296 If any action or proceeding is brought against the Indemnitees by reason of any of the matters against which Consultant has agreed to indemnify the Indemnitees as above provided, Consultant, upon notice from the CITY, shall defend the Indemnitees at Consultant's expense by counsel acceptable to the City. The Indemnitees need not have first paid any of the matters as to which the Indemnitees are entitled in order to be so indemnified. The insurance required to be maintained by Consultant under paragraph 15 shall ensure Consultant's obligations under this paragraph 14(b), but the limits of such insurance shall not limit the liability of Consultant hereunder. The provisions of this paragraph 14(b) shall survive the expiration or earlier termination of this agreement. The Consultant's indemnification does not extend to Claims occurring as a result of the City's sole negligent or willful acts or omissions. 15. INSURANCE. A. Insurance Requirements. Consultant shall provide and maintain insurance acceptable to the City Attorney in full force and effect throughout the term of this Agreement, against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work hereunder by Consultant, its agents, representatives or employees. Insurance is to be placed with insurers with a current A.M. Best's rating of no less than A:VII. Consultant shall provide the following scope and limits of insurance: (1) Minimum Scope of Insurance. Coverage shall be at least as broad as: (a) Insurance Services Office form Commercial General Liability coverage (Occurrence Form CG 0001). (b) Insurance Services Office form number CA 0001 (Ed. 1/87) covering Automobile Liability, including code 1 "any auto" and endorsement CA 0025, or equivalent forms subject to the written approval of the City. (c) Workers' Compensation insurance as required by the Labor Code of State of California and Employer's Liability insurance and covering all persons providing services on behalf of the Consultant and all risks to such persons under this Agreement. (d) Errors and omissions liability insurance appropriate to the Consultant's profession. (2) Minimum Limits of Insurance. Consultant shall maintain limits of insurance no less than: (a) General Liability: $1,000,000 per occurrence for bodily injury, personal injury and property damage. If Commercial General Liability Insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the activities related to this Agreement or the general aggregate limit shall be twice the required occurrence limit. (b) Automobile Liability: $1,000,000 per accident for bodily injury and property damage. PSA Page 5 of 15 Financial Advisory Services 181/296 (c) Workers' Compensation and Employer's Liability: Workers' Compensation as required by the Labor Code of the State of California and Employers Liability limits of$1,000,000 per accident. (d) Errors and Omissions Liability: $1,000,000 per claim. If coverage is maintained on a claims-made basis, Consultant shall maintain such coverage for an additional period of three (3) years following termination of the contract. B. Other Provisions. Insurance policies required by this Agreement shall contain the following provisions: (1) All Policies. Each insurance policy required by this paragraph 15 shall be endorsed and state the coverage shall not be suspended, voided, canceled by the insurer or either party to this Agreement, reduced in coverage or in limits except after 30 days' prior written notice by Certified mail, return receipt requested, has been given to the City. (2) General Liability and Automobile Liability Coveraaes. (a) City, its officers, officials, and employees and volunteers are to be covered as additional insureds as respects: liability arising out of activities Consultant performs, products and completed operations of Consultant; premises owned, occupied or used by Consultant, or automobiles owned, leased or hired or borrowed by Consultant. The coverage shall contain no special limitations on the scope of protection afforded to City, its officers, officials, or employees. (b) Consultant's insurance coverage shall be primary insurance as respect to City, its officers, officials, employees and volunteers. Any insurance or self-insurance maintained by City, its officers, officials, employees or volunteers shall apply in excess of, and not contribute with, Consultant's insurance. (c) Consultant's insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer's liability. (d) Any failure to comply with the reporting or other provisions of the policies including breaches of warranties shall not affect coverage provided to the City, its officers, officials, employees or volunteers. (3) Workers' Compensation and Employer's Liability Coverage. Unless the City Manager otherwise agrees in writing, the insurer shall agree to waive all rights of subrogation against City, its officers, officials, employees and agents for losses arising from work performed by Consultant for City. C. Other Requirements. Consultant agrees to deposit with City, at or before the effective date of this contract, certificates of insurance necessary to satisfy City that the insurance provisions of this contract have been complied with. The City Attorney may require that Consultant furnish City with copies of original endorsements effecting coverage required by this Section. The certificates and endorsements are to be signed by a person authorized by that insurer to bind coverage on its behalf. City reserves the right to inspect complete, certified copies of all required insurance policies, at any time. PSA Page 6 of 15 Financial Advisory Services 182/296 (1) Consultant shall furnish certificates and endorsements from each subcontractor identical to those Consultant provides. (2) Any deductibles or self-insured retentions must be declared to and approved by City. At the option of the City, either the insurer shall reduce or eliminate such deductibles or self-insured retentions as respects the City, its officers, officials, employees and volunteers; or the Consultant shall procure a bond guaranteeing payment of losses and related investigations, claim administration, defense expenses and claims. (3) The procuring of such required policy or policies of insurance shall not be construed to limit Consultant's liability hereunder nor to fulfill the indemnification provisions and requirements of this Agreement. 16. NONDISCRIMINATION/NONPREFERENTIAL TREATMENT STATEMENT. In performing this Agreement, the Parties shall not discriminate or grant preferential treatment on the basis of race, sex, color, age, religion, sexual orientation, disability, ethnicity, or national origin, and shall comply, to the fullest extent allowed by law, with all applicable local, state and federal laws relating to nondiscrimination. 17. UNAUTHORIZED ALIENS. Consultant hereby promises and agrees to comply with all of the provisions of the Federal Immigration and Nationality Act (8 U.S.C.A. & 1101, et seq.), as amended; and in connection therewith, shall not employ unauthorized aliens as defined therein. Should Consultant so employ such unauthorized aliens for the performance of work and/or services covered by this contract, and should the Federal Government impose sanctions against the City for such use of unauthorized aliens, Consultant hereby agrees to, and shall, reimburse City for the cost of all such sanctions imposed, together with any and all costs, including attorneys' fees, incurred by the City in connection therewith. 18. ENTIRE AGREEMENT. This Agreement is the complete, final, entire and exclusive expression of the Agreement between the parties hereto and supersedes any and all other agreements, either oral or in writing, between the parties with respect to the subject matter herein. Each party to this Agreement acknowledges that no representations by any party which are not embodied herein and that no other agreement, statement, or promise not contained in this Agreement shall be valid and binding. 19. GOVERNING LAW. The City and Consultant understand and agree that the laws of the State of California shall govern the rights, obligations, duties and liabilities of the parties to this Agreement and also govern the interpretation of this Agreement. Any litigation concerning this Agreement shall take place in the San Bernardino County Superior Court. 20. ASSIGNMENT OR SUBSTITUTION. City has an interest in the qualifications of and capability of the persons and entities who will fulfill the duties and obligations imposed upon Consultant by this Agreement. In recognition of that PSA Page 7 of 15 Financial Advisory Services 183/296 interest, neither any complete nor partial assignment of this Agreement may be made by Consultant nor changed, substituted for, deleted, or added to without the prior written consent of City. Any attempted assignment or substitution shall be ineffective, null, and void, and constitute a material breach of this Agreement entitling City to any and all remedies at law or in equity, including summary termination of this Agreement. Subcontracts, if any, shall contain a provision making them subject to all provisions stipulated in this Agreement. 21. MODIFICATION OF AGREEMENT. The terms of this Agreement can only be modified in writing approved by the City Council and the Consultant. The parties agree that this requirement for written modifications cannot be waived and any attempted waiver shall be void. 22. AUTHORITY TO EXECUTE. The person or persons executing this Agreement on behalf of Consultant warrants and represents that he/she/they has/have the authority to execute this Agreement on behalf of his/her/their corporation and warrants and represents that he/she/they has/have the authority to bind Consultant to the performance of its obligations hereunder. 23. NOTICES. Notices shall be given pursuant to this Agreement by personal service on the party to be notified, or by written notice by email, or upon such party deposited in the custody of the United States Postal Service addressed as follows: City. Consultant. Attention: City Clerk Attention: Suzanne Harrell City of Chino Hills Harrell & Company Advisors, LLC 14000 City Center Drive 333 City Boulevard West, Suite 1215 Chino Hills, California 91709 Orange, CA 92868 Email: cityclerk@chinohills.org Email: s.harrell@harrellco.com The notices shall be deemed to have been given as of the date of personal service, or three (3) days after the date of deposit of the same in the custody of the United States Postal Service. 24. FIDUCIARY DUTY. In connection with the services described herein, certain disclosures are required by the Securities and Exchange Commission and the Municipal Securities Rulemaking Board regarding the Consultant's fiduciary duty to their municipal clients. These disclosures are attached as Exhibit C (titled Municipal Advisor Disclosure). PSA Page 8 of 15 Financial Advisory Services 184/296 25. CONSISTENCY. In interpreting this Agreement and resolving any ambiguities, the main body of this Agreement takes precedence over the attached Exhibits; this Agreement supersedes any conflicting provisions. Any inconsistency between the Exhibits will be resolved in the order in which the Exhibits appear below: A. Exhibit A: Scope of Work B. Exhibit B: Compensation C. Exhibit C: Municipal Advisors Disclosure 26. SEVERABILITY. The invalidity in whole or in part of any provision of this Agreement shall not void or affect the validity of the other provisions of this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the day and year first written above. CITY OF CHINO HILLS HARRELL & COMPANY ADVISORS, LLC 1-17AAAA Cynthia Moran (S`iare) Mayor Suzanne Harrell/Managing Member ATTEST: (Printed name/Title) Cheryl Balz (Date) City Clerk (Date) (Signature) APPROVED AS TO FORM: (Printed Name/Title) Mark D. Hensley (Date) City Attorney PSA Page 9 of 15 Financial Advisory Services 185/296 EXHIBIT A SCOPE OF SERVICES I. SERVICES a. The scope of services includes a wide array of financial advisory services. These services include (but are not limited to) providing financial advisory services for a variety of debt issues (both new and refunding issues), providing guidance for financing programs for on-going and new programs, and current and new projects, assisting in developing and maintaining a long-term financial plan for on-going and new operating programs, on-going operational costs and capital projects for the City, assisting in developing financial condition factors to evaluate the City's financial condition, providing financial analysis and guidance regarding the feasibility of the City's participation in public-public or public-private partnerships where respective financial interests must be determined, providing analyses of and recommending alternatives for the impact of state and national legislation, providing financial analyses and guidance regarding the feasibility of the City's implementation of or a continuation in a City service or program, and assisting in gathering and preparation of SEC required continuing disclosure materials and preparing the Annual Reports required under the City's Continuing Disclosure Agreements. b. The consultant is expected to be available on a continuing, short-notice basis, to provide immediate responses to requests for guidance or answers to questions received from the City Manager or Finance Director. In order to provide these immediate responses, it is expected that the consultant will maintain a complete working knowledge of the City's financial structure and condition. Due to limited available City staff time, the consultant's staff will be expected to gather and photocopy materials that the consultant will require in order to maintain the required knowledge about the City's financial structure and condition on a continuing basis to keep abreast of the City's financial condition such as attending budget workshops, City Council meetings as necessary, reviewing the Comprehensive Annual Financial Report, reading the City Council minutes and requesting staff reports from City Clerk as necessary. c. The scope of services for debt issue financial advisory services include, but are not limited to: sizing bond issue; structuring terms and conditions of the issue; preparing cash flows; preparing preliminary and final official statements; reviewing and commenting on legal documents prepared by bond counsel; submitting documents, conducting negotiations, and attending meetings with rating agencies and bond insurance companies and assisting in preparing dialogue with the rate analyst; preparing PSA Page 10 of 15 Financial Advisory Services 186/296 documentation of cost benefit analysis of using credit enhancements for the bond issue; advising the City in regards to market movements and the timing of the issuance of the debt; coordinating the plans for opening the bids, evaluating the submitted bids, checking the mathematical accuracy of the bids, and making a recommendation as to the award of the bid; assisting in the selection of underwriter in the event of a negotiated sale, negotiating interest rates with the selected underwriter; preparing a procedure manual for the disposition of proceeds, cash flows, yield restrictions, and SEC disclosure requirements; preparing the financial statement disclosure required by Governmental Accounting Standards Board Statement 7; and attend meetings with staff and City Council meetings as necessary or requested by the City Manager and Finance Director. d. Consultant will act as Dissemination Agent under and pursuant to the existing Continuing Disclosure Agreements for various debt issues. Consultant will file the Annual Reports and the City's Financial Statements on the MSRB's EMMA system. Consultant will also prepare and file on the MSRB's EMMA system, any notices of material events of which they are aware, or in the case of an underlying rating, other change or defeasance, those material events of which the City informs the Consultant. II. ASSIGNED PRINCIPALS The staff assigned by the consultant to provide the services described above includes the following individual: Suzanne Q. Harrell, Managing Director If the consultant desires to replace the above-named staff member with a different staff member(s), these substitute staff members shall have the same professional knowledge, skills, abilities, and demeanor as the above-named staff member. The consultant shall not assign another staff person to substitute for the above-named staff member without the prior approval of the City. The City shall not unreasonably withhold approval for a substitute consultant staff member if the consultant's staff member has the requisite expertise, style and demeanor. PSA Page 11 of 15 Financial Advisory Services 187/296 EXHIBIT B COMPENSATION I. The annual compensation to be paid to the consultant for the services described in Sections I (a) and I (b) of Exhibit A is based on a retainer fee in the amount of twenty-five thousand dollars ($25,000). The annual period for which the retainer is to be paid is a calendar year which includes a twelve-month period beginning on January 1 of a calendar year and ending on December 31. The retainer shall be paid to the consultant in quarterly installments. II. The compensation to be paid to the consultant for the services described in Section I (c) of Exhibit A for each debt issue is as follows: A fixed fee of $10,000 for preparation of the preliminary/final official statements for each separately sold and marketed bond issue. If the City chooses to have the official statement prepared by its disclosure counsel,this fee would not apply. This fee is contingent on the successful sale of bonds and payable from bond proceeds. A fixed fee for all other financial advisory services in connection with each series of bond issue separately marketed and sold as follows: • $40,000 if the principal amount of bonds issued is less than $10 million; • $50,000 if the principal amount of bonds issued between $10 million and $15 million; • $60,000 if the principal amount of bonds issued between $15 million and $25 million; and • $75,000 if the principal amount of bonds issued exceeds $25 million. This compensation is contingent upon the successful sale of the debt issue. The compensation sale is to be paid out of the proceeds of the debt issue and shall be paid upon closing of the debt issue sale. The compensation to be paid to the consultant for the services described in Section I (c) of Exhibit A for debt issues of par amounts less than ten million dollars ($10,000,000) shall be negotiated between the City and the consultant. If the City and the consultant cannot agree on the reduction in compensation for a debt issue that is less than a par amount of $10,000,000, the City shall have the right to secure financial advisory services from another financial advisor for this debt issue. The consultant shall not have the right to any compensation other than the compensation described in I above, for a debt issue for which the PSA Page 12 of 15 Financial Advisory Services 188/296 consultant does not provide the service described in Section I (c) of Exhibit A. III. The compensation to be paid to the consultant for the services described in Section I (d) of Exhibit A for each debt issue is as follows: A fixed fee of $500 per issue for filing of the Annual Report and City's Financial Statements and a fee of$50 per notice for the preparation and filing of Material Event Notices. IV. The consultant shall be reimbursed for actual out-of-pocket costs that are incurred in performing the services described in Sections I (a) through (d) of Exhibit A. Such reimbursement shall not exceed five thousand dollars ($5,000) annually. The reimbursable costs incurred for providing the services described in Section I (c) of Exhibit A shall be paid out of the debt issue proceeds. The consultant may submit cost reimbursement invoices to the City on a periodic basis during the fiscal year in which the costs were incurred. However, all invoices for cost reimbursements shall be submitted by the consultant by July 31 of the fiscal year immediately following the fiscal year in which the reimbursable costs were incurred. The consultant shall submit with the reimbursable cost invoice, where practical, all invoice for expenditure incurred for which a reimbursement is being requested. V. In the event that the City and the consultant mutually agree that in any year that activities and demands upon the consultant for services described in Sections I (a) and (b) of Exhibit A were insufficient to justify payment of the full twenty-five thousand dollar ($25,000) retainer amount, the consultant shall negotiate with the City for a mutually agreed upon reduction of the retainer for the fiscal year. In no event shall the amount of the reduction in the retainer amount exceed fifteen thousand dollars ($15,000) for a fiscalyear. VI. For fiscal years beginning after December 31, 2019, the consultant may request an adjustment of the retainer described in Sections I, II and III above, and an adjustment in the maximum annual reimbursable costs described in Section IV above. Any adjustment in retainer fee/and or maximum reimbursable cost amounts shall be mutually agreed upon by the City and the consultant. The consultant shall submit the adjustment request to the City six months prior to the beginning of the year for which the consultant seeks an adjustment. PSA Page 13 of 15 Financial Advisory Services 189/296 EXHIBIT C MUNICIPAL ADVISOR DISCLOSURES Harrell & Company Advisors, LLC (Harrell & Co.) is registered as a "municipal advisor" pursuant to Section 15B of the Securities Exchange Act (Act) and rules and regulations adopted by the United States Securities and Exchange Commission (SEC) and the Municipal Securities Rulemaking Board (MSRB). The SEC has approved MSRB Rule G-42 which, among other matters, requires Harrell & Co. to provide the City with information regarding any conflicts of interest that Harrell & Co. may have and with information about where to find Harrell & Co.'s SEC filings on the SEC website. As a Municipal Advisor in connection with services provided under this agreement or any bonds that are issued pursuant to this agreement, Harrell & Co. will owe a fiduciary duty to the City (and its related entities) and will carry out its duties in accordance with such duty. Simply put, this means that Harrell & Co. owes the City both a duty of loyalty and a duty of care and that in performing services that Harrell & Co. may undertake in connection with any bond issue, Harrell & Co. will put the needs of the City ahead of its own. This standard of care is higher than that required of other financial services providers such as underwriters. The fees to be paid by the City to Harrell & Co. for the issuance of bonds are based on the relative size of the transaction and contingent on the successful closing of the financing. Although this form of compensation may be customary, it presents a conflict because Harrell & Co. may have an incentive to recommend unnecessary financings or financings that are disadvantageous to the City. In addition, if facts or circumstances arise that could cause the financing to be delayed or fail to close, Harrell & Co. may have an incentive to discourage a full consideration of such facts and circumstances, or to discourage consideration of alternatives that may result in the cancellation of the financing. Harrell & Co. manages and mitigates this conflict primarily by adherence to the fiduciary duty which Harrell & Co. owes to municipal entities such as the City which require Harrell & Co. to put the interests of the City ahead of its own. Harrell & Co. has determined, after exercising reasonable diligence, that other than described above, that it has no known material conflicts of interest that would impair its ability to provide advice to the City in accordance with its fiduciary duty to municipal entity clients such as the City. To the extent any such material conflicts of interest arise after the date of our engagement Harrell & Co. will inform the City of such conflicts. The City may terminate Harrell & Co.'s services at any time upon written notice. Harrell & Co. may withdraw from its representation as Municipal Advisor upon written notice to the City subject to the fiduciary duty described above which PSA Page 14 of 15 Financial Advisory Services 190/296 may require it to continue to represent the City until an appropriate replacement is identified which will depend on the status of the transaction. Harrell & Co. is required to disclose to the SEC information regarding criminal actions, regulatory actions, investigations, terminations, judgments, liens, civil judicial actions, customer complaints, arbitrations and civil litigation involving us. Pursuant to MSRB Rule G-42, Harrell & Co. is required to disclose any legal or disciplinary event that is material to the City's evaluation of Harrell & Co. or the integrity of its management or advisory personnel. As reflected in Harrell & Co.'s filings with the SEC, Harrell & Co. has determined that no such event exists. Copies of our filings with the United States Securities and Exchange Commission can currently be found by accessing the SEC's EDGAR system Company Search Page which is currently available at https://www.sec.gov/edgar/searchedgar/companysearch.html and searching for either "Harrell & Co Advisors" or for our CIK number which is 0001610917. The City's current bond counsel, Norton Rose Fulbright US LLP, acts as compliance counsel to the Harrell & Co. in connection with their general regulatory obligations as a municipal advisor; however, such representation does not include representation with respect the City's bond transactions or any evaluation or opinion as to whether Harrell & Co. is satisfying or has satisfied any fiduciary duty, fair dealing obligation or suitability analysis with respect to individual transactions or clients. The Act prohibits underwriters from switching from a financial advisory role in developing a financing to an underwriting role. Harrell & Co. is not engaged in underwriting. The MSRB has made available on its website (www.msrb.org) a municipal advisory client brochure that describes the protections that may be provided by MSRB rules and how to file a complaint with the appropriate regulatory authority. PSA Page 15 of 15 Financial Advisory Services 191/296 RESOLUTION NO. 2018R- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHINO HILLS, CALIFORNIA, ADOPTING A BUDGET AMENDMENT FOR FISCAL YEAR 2018-19 INCREASING THE BUDGET IN VARIOUS FUNDS BY $3,300 FOR DISSEMINATION AGENT SERVICES. WHEREAS, the City Manager has presented to the City Council a proposed budget for Fiscal Year 2018-19; and WHEREAS, the City Council of the City of Chino Hills conducted a public meeting on June 12, 2018, to consider the Fiscal Year 2018-19 budget document, and adopted a budget for the fiscal year commencing July 1, 2018, and ending July 30, 2019; and WHEREAS, amendments must periodically be made to the budget to conform to changed circumstances following adoption of the budget. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CHINO HILLS DOES RESOLVE, DETERMINE, AND ORDER AS FOLLOWS: SECTION 1. Budget Adjustment No. 19B032 is hereby approved as reflected on Exhibit No. 1, attached hereto. SECTION 2. The City Clerk shall certify to the adoption of this Resolution. PASSED,APPROVED, AND ADOPTED this 11th day of December, 2018. CYNTHIA MORAN, MAYOR ATTEST: CHERYL BALZ, CITY CLERK APPROVED AS TO FORM: MARK D. HENSLEY, CITY ATTORNEY 192/296 STATE OF CALIFORNIA ) COUNTY OF SAN BERNARDINO ) § CITY OF CHINO HILLS ) I, Cheryl Balz, City Clerk of the City of Chino Hills, DO HEREBY CERTIFY that the foregoing Resolution No. 2018R- was duly adopted at a regular meeting of the City Council of the City of Chino Hills held on the 11th day of December, 2018, by the following vote, to wit: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: CHERYL BALZ, CITY CLERK The foregoing is the original of Resolution No. 2018R- duly passed and adopted by the Chino Hills City Council at their regular meeting held December 11, 2018. CHERYL BALZ, CITY CLERK 2 of 2 193/296 Exhibit No.1 te CITY OF CHINO HILLS BUDGET AMENDMENT Chin.E3iik BA# 19B032 Date: 12/11/2018 Fiscal Year: 2018-19 Requested by: Christa Buhagiar Amount: $3,300.00 Dept/Div: Finance/Development Program Description: Dissemination Agent Services Harrell&Co. EXPENDITURES Project ICurrent Proposed Amended Account Number Number Account Description Budget Amendment Budget 627-5100-888-3020 CFD 1 -Financial Services $ 9,946.00 $ 34.99 $ 9,980.99 698-5100-888-3020 CFD 2-Financial Services 19,585.00 246.50 19,831.50 640-5100-888-3020 CFD 5-Financial Services 20,533.00 794.21 21,327.21 644-5100-888-3020 CFD 6-Financial Services 4,728.00 24.30 4,752.30 657-5100-888-3020 CFD 9-Financial Services 10,476.00 550.00 11,026.00 658-5100-888-3020 CFD 10-Financial Services 7,886.00 550.00 8,436.00 699-5200-888-3020 RAD 10-1 -Financial Services 14,893.00 550.00 15,443.00 500-8110-888-3020 Water Fund-Financial Services 3,500.00 550.00 4,050.00 REVENUES Project Current Proposed Amended Account Number Number Account Description Budget Amendment Budget $ - REASON/JUSTIFICATION To appropriate funds for the dissemination agent services on various bond issues associated with the Harrell&Company Advisors,LLC agreement. 194/296