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HomeMy WebLinkAbout2018 $660,000 GP Imp Bonds Series 2018A Master Agreement for Arbitrage Monitoring ServicesMASTER AGREEMENT FOR ARBITRAGE MONITORING SERVICES City of Gem Lake 4200 Otter Lake Rd White Bear Lake, MN 55110-3227 Effective as of August 1, 2018 For the following Obligation $660,000 General Obligation Improvement Bonds, Series 2018A With a Closing Date of July 12, 2018 Ehlers & Associates, Inc. ("Ehlers") and the City of Gem Lake, Minnesota ("Client") do hereby mutually agree to the following with regard to the provision of arbitrage monitoring services. In consideration of the mutual promises and covenants contained herein, and for other good and valuable consideration, it is agreed by and between Ehlers and Client as follows: The above referenced obligation is subject to the arbitrage provisions of the Internal Revenue Code of 1986 and related Treasury regulations. To comply with the statute and regulations the Client must undertake certain calculations. Ehlers will provide certain arbitrage monitoring services for all funds related to this obligation to assist the Client in complying with the arbitrage provisions, all as more particularly described in this Agreement. EHLERS RESPONSIBILITIES - SCOPE OF SERVICES Ehlers agrees to provide the following services to Client: Review the following documents: a. Information Return for Tax -Exempt Governmental Obligations (Form 8038-G) b. Arbitrage Certificate c. Official Statement d. Addendum to Official Statement, if any e. Closing Memorandum, if any f. Post Sales Report, if any g. Verification Report, if any h. Prior Arbitrage Calculation, if any i. Trust Indenture, if any J. Credit Enhancement Agreement, if any 2. Calculate the Client's arbitrage liability under Section 148(f) of the Internal Revenue Code of 1986, as amended and applicable Treasury regulations in connection with this obligation, including: a. Obtain nonpurpose investment transaction data for all funds related to this obligation b. Review and analyze nonpurpose investment transaction data as required based on the aforementioned documents c. Compute/verify the amount of spend -down penalties payable to the IRS for obligations applying such provisions d. Confirm the arbitrage yield e. Compute/verify the amount of excess earnings, if any, on nonpurpose investments and the value of those earnings as of the applicable computation date f. Determine the rebate amount and rebate payment due to the IRS, if any g. Compute/verify the yield reduction payment due on yield restricted nonpurpose investments, if any h. Assist with the purchase of State and Local Government Series of U.S. Treasuries for yield restriction of the investments, if necessary i. Prepare arbitrage reports, including computational methods and assumptions used in the analysis and conclusions supporting the calculation J. Prepare IRS Form 8038-T or 8038-R, if required k. Obtain a legal opinion for the arbitrage reports and IRS Form 8038-T or 8038-R, if required 1. Deliver arbitrage reports, along with legal opinion and IRS Form 8038-T or 8038-R, if applicable Maintain a system for computing and tracking the arbitrage liability and future arbitrage computation dates, as necessary. 4. Evaluate and make recommendations on record keeping practices for those funds and accounts subject to arbitrage compliance. 5. Apprise Client of any changes in the arbitrage regulations that may occur during the term of this Agreement. 6. Client acknowledges that, in its sole discretion, Ehlers may contract with third parties selected by Ehlers for the performance of some of the services to be performed hereunder. CLIENT RESPONS16iLi T 1ES Client agrees to provide Ehlers with timely and accurate information regarding pertinent cash and investment activity as well as pertinent revenue and expenditure activities for all funds related to this review. The information that shall be provided includes: A detailed transaction listing of revenues and expenditures made within all funds related to this obligation for the applicable computation period, including: a. Deposits and withdrawals of gross proceeds, including all investment activity such as interest revenues b. Any other information Ehlers may deem necessary to complete the calculations such as running balances 2. Client agrees to notify Ehlers of the full redemption of this obligation and obligations covered by subsequent Addenda prior to the final stated maturity date. Failure to do so will relieve Ehlers of any responsibilities under this Agreement. 3. Client agrees to notify Ehlers if the Client disagrees with any of the assumptions contained in the summary of computational information of the arbitrage report. Such notice will be made within ten business days upon Client's receipt of said report. FEE ARRANGEMENT Ehlers will charge Client a base fee of $2,250 per bond year to determine spending exceptions, bona fide debt service fund exemptions, penalty calculations, rebate amounts and yield reduction payments for all funds related to this obligation. Depending on the structure of the transaction, certain complexities may require computational work that extends beyond the scope of a standard arbitrage calculation. Conversely, the amount of computational work required to prepare future arbitrage calculations may decrease due to aggressive expenditures of gross proceeds. In such instances, Ehlers will charge additional fees and/or offer discounts in accordance with the fee schedule set forth below. Additions to Base Fee Variable rate obligation $500 per bond year Commingled funds $150 per hour Transferred proceeds analysis $150 per hour Debt service residual analysis $150 per hour Variable rate computation period analysis To be negotiated Universal cap analysis To be negotiated IRS Form 8038-T preparation $500 to $1,000 per form IRS Form 8038-R preparation $500 to $1,000 per form Legal opinion To be determined Recalculation of prior arbitrage liability To be negotiated Discounts to Base Fee Monitoring of debt service fund only $1,000 per year Monitoring of yield restriction only $1,000 per year Discretionary discounts To be determined by Ehlers Ehlers will invoice Client for the amount due. The invoice is due and payable by the Client within 60 days of the invoice date. Other obligations may be covered by this Agreement in an Addendum. The fees shown in the Addendum may differ from those shown above. LIMIT OF LIABILITY To the fullest extent permitted by applicable law, the total aggregate liability of Ehlers under this Agreement for any actions or omissions taken by Ehlers in the performance of this Agreement shall be limited to the fees paid by Client to Ehlers under this Agreement. However, such liability limitation shall not apply to the extent penalty and/or interest is imposed on Client by the IRS on any additional rebate amount or yield reduction payment that results from the gross negligence or intentional misconduct of Ehlers in rendering the services outlined in this Agreement. in such case, it is agreed that Ehlers will be liable only for penalty and/or interest imposed by the IRS on any additional rebate amount or yield reduction payment that results from the gross negligence or intentional misconduct of Ehlers. The Client is ultimately responsible for the completion and filing of IRS Form 8038-T or 8038-R. Client, and not Ehlers, shall be responsible for payment of any rebate amount or yield reduction payment due and any interest or penalty for failure to make timely payments. Under no circumstances shall any employee or agent of Ehlers have any personal liability arising out of this Agreement and no party shall seek or claim any such personal liability. NO THIRD PARTY BENEFICIARY No third party shall have any rights or remedies under this Agreement. This Agreement is made solely for the benefit of the parties hereto, and no other person, partnership, limited liability company, association, or corporation shall acquire or have any rights under this Agreement. CONFIDENTIALITY: DISCLOSURE OF INFORMATION Client Information All information, files, records, memoranda and other data of the Client ("Client Information") shall be deemed by the parties to be the property of Client. Ehlers may disclose Client information to third parties in connection with the performance by it of its duties hereunder. Ehlers Information Client acknowledges that in connection with the performance by Ehlers of its duties hereunder, Client may become aware of internal files, records, memoranda and other data, including without limitation computer programs of Ehlers ("Ehlers Information"). Client acknowledges that all Ehlers Information, except reports prepared by Ehlers for the Client, is confidential and proprietary to Ehlers, and agrees that Client will not, directly or indirectly; disclose the same or any part thereof to any person or entity except with the express written consent of Ehlers. TERM / TERMINATION OF CONTRACT The term of this Agreement shall begin on the effective date of this Agreement and shall continue until such time as the above -referenced obligation is no longer outstanding. Either party may terminate this Agreement with or without cause at any time during the term of this Agreement by sending written notice of termination to the other party at least 30 days prior to the effective date of termination. Termination of this Agreement shall extend to the termination of all Addenda to this Agreement and the obligations covered by such Addenda. Should this Agreement be terminated, Ehlers shall be relieved of all liability for the above -referenced obligation and any obligations described in the Addenda to this Agreement. SEVERABILITY To the extent any provision of this Agreement shall be determined invalid or unenforceable, the invalid or unenforceable portion shall be deleted from this Agreement, and the validity and enforceability of the remainder shall be unaffected. EVENT OF DEFAULT OR REFUNDING Ehlers is relieved of all its liability and obligations agreed to herein should Client be in default on its principal and/or interest payments due on the above referenced obligation. In addition, Ehlers is relieved of all its liability and obligations agreed to herein should the above referenced obligation be refunded. ENTIRE AGREEMENT There are no representations, covenants, warranties, promises, agreements, conditions or undertakings, oral or written, between Client and Ehlers other than as set forth herein. Except or otherwise expressly provided 'herein, no subsequent alteration, amendment, change or addition to this Agreement shall be binding upon Ehlers. AMENDMENT Ehlers and Client may mutually agree in writing to amend the obligations covered by this Agreement (which amendment shall be reflected in an Addendum to this Agreement), the scope of services and/or the fee arrangement at any time. No modification, alteration, or amendment to this Agreement shall be binding upon any party hereto until such modification, alteration, or amendment is reduced to writing and duly executed by both parties hereto. GOVERNING LAW This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota. NOTICE All notices given shall be in writing anu shaii be deemed to have been g- iven when delivered, transmitted by first class, registered or certified mail, postage prepaid and addressed as follows: If to Client: If to Ehlers: City of Gem Lake Ehlers & Associates 4200 Otter Lake Rd 3060 Centre Pointe Drive White Bear Lake, MN 55110-3227 Roseville, MN 55113 Attn: City Treasurer Attention: President In Witness Whereof, the parties have executed this Agreement this day of By: �72� Title: Ehlers & Associates, Inc. By: —4z 71- 19 , Title: _Arbitrage Managing Consultant