CONTRACT 5941 Professional Services Agreement CLOSEDAgreement No. 5941
Agreement No. _[City Clerk assigns]_
W-T-T-v�or
kk PROFESSIONAL SERVICES AGREEMENT
BETWEEN
THE CITY F EL SEGUNDO AND
LO
IE KNN PUBLIC FINANCE LLC
This AGREEMENT is made and entered into this 22nd day of July, 2020, by and
between the CITY OF EL SEGUNDO, a municipal corporation and general law city
("CITY") and KNN PUBLIC FINANCE, a limited liability corporation ("CONSULTANT").
The parties agree as follows:
1. CONSIDERATION.
A. As partial consideration, CONSULTANT agrees to perform the work listed
in the SCOPE OF SERVICES, below;
B. As additional consideration, CONSULTANT and CITY agree to abide by
the terms and conditions contained in this Agreement;
C. As additional consideration, CITY agrees to pay CONSULTANT a sum not
to exceed Twenty -Four Thousand Nine hundred dollars ($24,900) for
CONSULTANT's services. CITY may modify this amount as set forth
below. Unless otherwise specified by written amendment to this
Agreement, CITY will pay this sum as specified in the attached Exhibit "A,"
which is incorporated by reference.
2. SCOPE OF SERVICES.
A. CONSULTANT will perform services listed in the attached Exhibit "A,"
which is incorporated by reference,
B. CONSULTANT will, in a professional manner, furnish all of the labor,
technical, administrative, professional and other personnel, all supplies
and materials, equipment, printing, vehicles, transportation, office space
and facilities, and all tests, testing and analyses, calculation, and all other
means whatsoever, except as herein otherwise expressly specified to be
furnished by CITY, necessary or proper to perform and complete the work
and provide the professional services required of CONSULTANT by this
Agreement.
3. PERFORMANCE STANDARDS. While performing this Agreement, CONSULTANT
will use the appropriate generally accepted professional standards of practice existing at
the time of performance utilized by persons engaged in providing similar services. CITY
will continuously monitor CONSULTANT's services. CITY will notify CONSULTANT of
any deficiencies and CONSULTANT will have fifteen (15) days after such notification to
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cure any shortcomings to CITY's satisfaction, Costs associated with curing the
deficiencies will be borne by CONSULTANT,
4. PAYMENTS. For CITY to pay CONSULTANT as specified by this Agreement,
CONSULTANT must submit a detailed invoice to CITY which lists the hours worked and
hourly rates for each personnel category and reimbursable costs (all as set forth in
Exhibit "A") the tasks performed, the percentage of the task completed during the billing
period, the cumulative percentage completed for each task, the total cost of that work
during the preceding billing month and a cumulative cash flow curve showing projected
and actual expenditures versus time to date.
5. NON -APPROPRIATION OF FUNDS. Payments due and payable to CONSULTANT
for current services are within the current budget and within an available, unexhausted
and unencumbered appropriation of the CITY. In the event the CITY has not
appropriated sufficient funds for payment of CONSULTANT services beyond the current
fiscal year, this Agreement will cover only those costs incurred up to the conclusion of
the current fiscal year,
6. FAMILIARITY WITH WORK.
A. By executing this Agreement, CONSULTANT agrees that it has:
Carefully investigated and considered the scope of services to be
performed;
Carefully considered how the services should be performed; and
iii. Understands the facilities, difficulties, and restrictions attending
performance of the services under this Agreement.
B. If services involve work upon any site, CONSULTANT agrees that
CONSULTANT has or will investigate the site and is or will be fully
acquainted with the conditions there existing, before commencing the
services hereunder. Should CONSULTANT discover any latent or
unknown conditions that may materially affect the performance of the
services, CONSULTANT will immediately inform CITY of such fact and will
not proceed except at CONSULTANT's own risk until written instructions
are received from CITY.
7. TERM. The term of this Agreement will be from July 1, 2020, to September 30,
2020. Unless otherwise determined by written amendment between the parties, this
Agreement will terminate in the following instances:
A. Completion of the work specified in Exhibit "A";
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B. Termination as stated in Section 15,
8. TIME FOR PERFORMANCE.
A. CONSULTANT will not perform any work under this Agreement until:
i. CONSULTANT furnishes proof of insurance as required under
Section 22 of this Agreement; and
CITY gives CONSULTANT a written notice to proceed.
B. Should CONSULTANT begin work on any phase in advance of receiving
written authorization to proceed, any such professional services are at
CONSULTANT's own risk.
9. TIME EXTENSIONS. Should CONSULTANT be delayed by causes beyond
CONSULTANT's control, CITY may grant a time extension for the completion of the
contracted services. If delay occurs, CONSULTANT must notify the Manager within
forty-eight (48) hours, in writing, of the cause and the extent of the delay and how such
delay interferes with the Agreement's schedule. The Manager will extend the
completion time, when appropriate, for the completion of the contracted services,
10. 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.
11. CHANGES, CITY may order changes in the services within the general scope of
this Agreement, consisting of additions, deletions, or other revisions, and the contract
sum and the contract time will be adjusted accordingly. All such changes must be
authorized in writing, executed by CONSULTANT and CITY. The cost or credit to CITY
resulting from changes in the services will be determined in accordance with written
agreement between the parties.
12JAXPAYER IDENTIFICATION NUMBER. CONSULTANT will provide CITY with a
Taxpayer Identification Number.
13. PERMITS AND LICENSES, CONSULTANT, at its sole expense, will obtain and
maintain during the term of this Agreement, all necessary permits, licenses, and
certificates that may be required in connection with the performance of services under
this Agreement.
14. WAIVER. CITY's review or acceptance of, or payment for, work product prepared
by CONSULTANT under this Agreement will not be construed to operate as a waiver of
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any rights CITY may have under this Agreement or of any cause of action arising from
CONSULTANT's performance. A waiver by CITY of any breach of any term, covenant,
or condition contained in this Agreement will not be deemed to be a waiver of any
subsequent breach of the same or any other term, covenant, or condition contained in
this Agreement, whether of the same or different character.
15JERMINATION.
A. Except as otherwise provided, CITY may terminate this Agreement at any
time with or without cause.
B. CONSULTANT may terminate this Agreement at any time with CITY's
mutual consent. Notice will be in writing at least thirty (30) days before the
effective termination date,
C. Upon receiving a termination notice, CONSULTANT will immediately
cease performance under this Agreement unless otherwise provided in the
termination notice. Except as otherwise provided in the termination notice,
any additional work performed by CONSULTANT after receiving a
termination notice will be performed at CONSULTANT's own cost; CITY
will not be obligated to compensate CONSULTANT for such work.
D. Should termination occur, all finished or unfinished documents, data,
studies, surveys, drawings, maps, reports and other materials prepared by
CONSULTANT will, at CITY's option, become CITY's property, and
CONSULTANT will receive just and equitable compensation for any work
satisfactorily completed up to the effective date of notice of termination,
not to exceed the total costs under Section 1 (C).
E. Should the Agreement be terminated pursuant to this Section, CITY may
procure on its own terms services similar to those terminated.
F. By executing this document, CONSULTANT waives any and all claims for
damages that might otherwise arise from CITY's termination under this
Section.
16.OWNERSHIP OF DOCUMENTS. All documents, data, studies, drawings, maps,
models, photographs and reports prepared by CONSULTANT under this Agreement are
CITY's property. CONSULTANT may retain copies of said documents and materials as
desired but will deliver all original materials to CITY upon CITY's written notice. CITY
agrees that use of CONSULTANT's completed work product, for purposes other than
identified in this Agreement, or use of incomplete work product, is at CITY's own risk.
17. PUBLICATION OF DOCUMENTS. Except as necessary for performance of service
under this Agreement, no copies, sketches, or graphs of materials, including graphic art
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work, prepared pursuant to this Agreement, will be released by CONSULTANT to any
other person or public CITY without CITY's prior written approval. All press releases,
including graphic display information to be published in newspapers or magazines, will
be approved and distributed solely by CITY, unless otherwise provided by written
agreement between the parties.
18. INDEMNIFICATION.
A. CONSULTANT agrees to the following:
L Indemnification for Professional Services. CONSULTANT will
save harmless and indemnify and at CITY's request reimburse
defense costs for CITY and all its officers, volunteers,
employees and representatives from and against any and all
suits, actions, or claims, of any character whatever, brought
for, or on account of, any injuries or damages sustained by
any person or property resulting or arising from any negligent
or wrongful act, error or omission by CONSULTANT or any of
CONSULTANT's officers, agents, employees, or
representatives, in the performance of this Agreement, except
for such loss or damage arising from CITY's sole negligence
or willful misconduct.
ii. Indemnification for other Damages. CONSULTANT indemnifies
and holds CITY harmless from and against any claim, action,
damages, costs (including, without limitation, attorney's fees),
injuries, or liability, arising out of this Agreement, or its
performance, except for such loss or damage arising from
CITY's sole negligence or willful misconduct. Should CITY be
named in any suit, or should any claim be brought against it
by suit or otherwise, whether the same be groundless or not,
arising out of this Agreement, or its performance,
CONSULTANT will defend CITY (at CITY's request and with
counsel satisfactory to CITY) and will indemnify CITY for any
judgment rendered against it or any sums paid out in
settlement or otherwise.
B. For purposes of this section "CITY" includes CITY's officers, officials,
employees, agents, representatives, and certified volunteers.
C. It is expressly understood and agreed that the foregoing provisions will
survive termination of this Agreement,
D. The requirements as to the types and limits of insurance coverage to be
maintained by CONSULTANT as required by Section 22, and any
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approval of said insurance by CITY, are not intended to and will not in any
manner limit or qualify the liabilities and obligations otherwise assumed by
CONSULTANT pursuant to this Agreement, including, without limitation, to
the provisions concerning indemnification.
19.ASSIGNABILITY. This Agreement is for CONSULTANT's professional services.
CONSULTANT's attempts to assign the benefits or burdens of this Agreement without
CITY's written approval are prohibited and will be null and void.
20. INDEPENDENT CONTRACTOR. CITY and CONSULTANT agree that
CONSULTANT will act as an independent contractor and will have control of all work
and the manner in which it is performed. CONSULTANT will be free to contract for
similar service to be performed for other employers while under contract with CITY.
CONSULTANT is not an agent or employee of CITY and is not entitled to participate in
any pension plan, insurance, bonus or similar benefits CITY provides for its employees.
Any provision in this Agreement that may appear to give CITY the right to direct
CONSULTANT as to the details of doing the work or to exercise a measure of control
over the work means that CONSULTANT will follow the direction of the CITY as to end
results of the work only.
21.AUDIT OF RECORDS. CONSULTANT will maintain full and accurate records with
respect to all services and matters covered under this Agreement. CITY will have free
access at all reasonable times to such records, and the right to examine and audit the
same and to make transcript therefrom, and to inspect all program data, documents,
proceedings and activities. CONSULTANT will retain such financial and program
service records for at least three (3) years after termination or final payment under this
Agreement.
22. INSURANCE.
A. Before commencing performance under this Agreement, and at all other
times this Agreement is effective, CONSULTANT will procure and
maintain the following types of insurance with coverage limits complying,
at a minimum, with the limits set forth below:
Tyoe of Insurance
Commercial general liability:
Professional Liability
Business automobile liability
Workers compensation
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Limits
$2,000,000
$1,000,000
$1,000,000
Statutory requirement
Agreement No. 5941
Agreement No. _[City Clerk assigns]_
B. Commercial general liability insurance will meet or exceed the
requirements of the most recent ISO -CGL Form. The amount of
insurance set forth above will be a combined single limit per occurrence
for bodily injury, personal injury, and property damage for the policy
coverage. Liability policies will be endorsed to name CITY, its officials,
and employees as "additional insureds" under said insurance coverage
and to state that such insurance will be deemed "primary" such that any
other insurance that may be carried by CITY will be excess thereto. Such
endorsement must be reflected on ISO Form No. CG 20 10 11 85 or 88, or
equivalent. Such insurance will be on an "occurrence," not a "claims
made," basis and will not be cancelable or subject to reduction except
upon thirty (30) days prior written notice to CITY.
C. Professional liability coverage will be on an "occurrence basis" if such
coverage is available, or on a "claims made" basis if not available. When
coverage is provided on a "claims made basis," CONSULTANT will
continue to renew the insurance for a period of three (3) years after this
Agreement expires or is terminated. Such insurance will have the same
coverage and limits as the policy that was in effect during the term of this
Agreement and will cover CONSULTANT for all claims made by CITY
arising out of any errors or omissions of CONSULTANT, or its officers,
employees or agents during the time this Agreement was in effect.
D. Automobile coverage will be written on ISO Business Auto Coverage Form
CA 00 01 06 92, including symbols 8 & 9 (hired and non -owned).
E. CONSULTANT will furnish to CITY duty authenticated Certificates of
Insurance evidencing maintenance of the insurance required under this
Agreement and such other evidence of insurance or copies of policies as
may be reasonably required by CITY from time to time. Insurance must
be placed with insurers with a current A.M. Best Company Rating
equivalent to at least a Rating of "AMI."
F. Should CONSULTANT, for any reason, fail to obtain and maintain the
insurance required by this Agreement, CITY may obtain such coverage at
CONSULTANT's expense and deduct the cost of such insurance from
payments due to CONSULTANT under this Agreement or terminate
pursuant to Section 155.
23. USE OF SUBCONTRACTORS. CONSULTANT must obtain CITY's prior written
approval to use any consultants while per -forming any portion of this Agreement. Such
approval must approve of the proposed consultant and the terms of compensation.
24. INCIDENTAL TASKS. CONSULTANT will meet with CITY monthly to provide the
status on the project, which will include a schedule update and a short narrative
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description of progress during the past month for each major task, a description of the
work remaining and a description of the work to be done before the next schedule
update.
25. NOTICES. All communications to either party by the other party will be deemed
made when received by such party at its respective name and address as follows:
If to CONSULTANT:
KNN Public Finance LLC
5901 W. Century Blvd, Suite 750
Los Angeles, CA 90045
Attention: Mark Young
Phone: (310) 348-2901
Email: myoung@knninc.com
I USX001 I WA
City of El Segundo
350 Main Street
El Segundo, CA
Attention: Joseph Lillio
Phone: (310) 524-2318
Email: jlillio@elsegundo.org
Any such written communications by mail will be conclusively deemed to have been
received by the addressee upon deposit thereof in the United States Mail, postage
prepaid and properly addressed as noted above. In all other instances, notices will be
deemed given at the time of actual delivery. Changes may be made in the names or
addresses of persons to whom notices are to be given by giving notice in the manner
prescribed in this paragraph.
26.CONFLICT OF INTEREST. CONSULTANT will comply with all conflict of interest
laws and regulations including, without limitation, CITY's conflict of interest regulations.
27. SOLICITATION. CONSULTANT maintains and warrants that it has not employed
nor retained any company or person, other than CONSULTANT's bona fide employee,
to solicit or secure this Agreement, Further, CONSULTANT warrants that it has not
paid nor has it agreed to pay any company or person, other than CONSULTANT's bona
fide employee, any fee, commission, percentage, brokerage fee, gift or other
consideration contingent upon or resulting from the award or making of this Agreement.
Should CONSULTANT breach or violate this warranty, CITY may rescind this
Agreement without liability.
28. THIRD PARTY BENEFICIARIES. This Agreement and every provision herein is
generally for the exclusive benefit of CONSULTANT and CITY and not for the benefit of
any other party. There will be no incidental or other beneficiaries of any of
CONSULTANT's or CITY's obligations under this Agreement.
29. INTERPRETATION, This Agreement was drafted in and will be construed in
accordance with the laws of the State of California, and exclusive venue for any action
involving this agreement will be in Los Angeles County.
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30. COMPLIANCE WITH LAW. CONSULTANT agrees to comply with all federal, state,
and local laws applicable to this Agreement.
31. ENTIRE AGREEMENT. This Agreement, and its Exhibit(s), sets forth the entire
understanding of the parties. There are no other understandings, terms or other
agreements expressed or implied, oral or written. This Agreement will bind and inure to
the benefit of the parties to this Agreement and any subsequent successors and
assigns.
32, RULES OF CONSTRUCTION. Each Party had the opportunity to independently
review this Agreement with legal counsel. Accordingly, this Agreement will be
construed simply, as a whole, and in accordance with its fair meaning; it will not be
interpreted strictly for or against either Party.
33. SEVERABILITY. If any portion of this Agreement is declared by a court of
competent jurisdiction to be invalid or unenforceable, then such portion will be deemed
modified to the extent necessary in the opinion of the court to render such portion
enforceable and, as so modified, such portion and the balance of this Agreement will
continue in full force and effect.
34.AUTHORITY1MODIFICATION. The Parties represent and warrant that all necessary
action has been taken by the Parties to authorize the undersigned to execute this
Agreement and to engage in the actions described herein. This Agreement may be
modified by written amendment.
35. ACCEPTANCE OF ELECTRONIC SIGNATURES. The Parties agree that this
Agreement, agreements ancillary to this Agreement, and related documents to be
entered into in connection with this Agreement will be considered signed when the
signature of a party is delivered by electronic (.pdf) or facsimile transmission. Such
electronic or facsimile signature will be treated in all respects as having the same effect
as an original signature.
36. CAPTIONS. The captions of the paragraphs of this Agreement are for convenience
of reference only and will not affect the interpretation of this Agreement.
37. TIME IS OF ESSENCE. Timeis of the essence for each and every provision of this
Agreement.
38. FORCE MAJEURE. Should performance of this Agreement be prevented due to fire,
flood, explosion, acts of terrorism, war, embargo, government action, civil or military
authority, the natural elements, or other similar causes beyond the Parties' reasonable
control, then the Agreement will immediately terminate without obligation of either party
to the other.
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Agreement No. 5941
Agreement No. _[City Clerk assigns]_
39. STATEMENT OF EXPERIENCE. By executing this Agreement, CONSULTANT
represents that it has demonstrated trustworthiness and possesses the quality, fitness
and capacity to perform the Agreement in a manner satisfactory to CITY.
CONSULTANT represents that its financial resources, surety and insurance experience,
service experience, completion ability, personnel, current workload, experience in
dealing with private consultants, and experience in dealing with public agencies all
suggest that CONSULTANT is capable of performing the proposed contract and has a
demonstrated capacity to deal fairly and effectively with and to satisfy a public CITY.
[Signatures on next page]
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Agreement No. 5941
Agreement No. fCitv Clerk assigns]_._.
INWITNESS WHEREOF the parties hereto have executed this Agreement the
day and year first hereinabove written.
CITY OF EL SEGUNDO
Joseph Lillio
Joseph Lillio,
Director of Finance
ATTMO,r-
Tracy Weaver,
City Clerk
APPROVED AS TO FORM'
for
-
Mark D. Hensley,
City Attorney
ANNPUBLICF1 LLC
ark Y ng
Managing Director
City of El Segundo Professional Services (REV 201&05)
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Agreement No. 5941
Qualifications for
Municipal Advisory Services
City of El Segundo
February 26, 2020
,&
public finance
BOO Clay Street, Suite 1000 1 Oakland, CA 94612 1 Main 510-839-8200 1 Fax 510-208-8282
1.151 Quail Street, Suite 200 1 Newport Beach, CA 92660 1 Main 949-346-4900 1 Fax 510-208-8282
5901 West Century Boulevard, Suite 750 1 Lm, Angeles, CA 90041 I Main 310-348-2901 1 Fax 510-208-8282
1 I I. -d I 'Al H- C,'y,"
Agreement No. 5941
0KNN
public finance
February 26, 2020
Joseph Lillio, Director of Finance
City of El Segundo
350 Main Street
El Segundo, California 90245
Dear Mr. Lillio,
Thank you for the opportunity for KNN Public Finance, LLC ('K-NIN") to submit our qualifications to
the City of El Segundo (the "City") to provide municipal advisory services (though "financial advisory"
and "municipal advisory" are sometimes used interchangeably, we use municipal advisory throughout our
response being a registered and regulated Municipal Advisor). We have the combination of experience,
resources and perspective to help you achieve your financial objectives. We highlight the following key
strengths of our firm and qualifications:
Holistic Advisory Approach. Our practice is built on a philosophy of providing comprehensive
service to our clients, and ensuring they make informed decisions regarding capital financing and
debt management activities, We view finance and debt issuance as 'just one component of meeting
public goals and we are strategic in making sure a potential transaction fits within longer-term
financial and policy objectives. A robust plan of finance will evaluate alternatives and tradeoffs in
terms of benefit, risk, cost, legal constraints, credit, investor concerns, and public policy to support
balanced recommendations,
• Large California Practice. KNN is a leading municipal advisory firm in California, ranking
among the top three in terms of par amount and number of transactions in California in most
years, and ranking in the top ten nationally, which is significant given our exclusive California
focus. This experience and market presence translate into resources available to provide you the
highest level of service.
California City Finance Expertise. KNN has a practice group dedicated to California cities.
Our proposed team has the experience and capabilities to plan, structure and execute virtually
every form of municipal financing that a California city may contemplate. We have served as
Municipal Advisor to the largest cities in the State — Los Angeles, San Diego, San Francisco, Long
Beach, Fresno, Oakland — and to cities as small as Calistoga, Capitola, Davis, and Gridley. We
bring a special expertise to the non -transaction side of the municipal advisory business, helping
many entities formulate long-term financing plans and develop written policies. We also apply
unmatched diligence in the area of disclosure, recognizing that this represents the area of greatest
risk to the individuals we work with at municipal issuers.
Integrity. KNN is an independent Municipal Advisory practice and does not market or
underwrite securities of any kind or offer other services that might conflict with our duty to
provide independent and objective analysis and advice. The integrity of your advisor is particularly
important in meeting your financial objectives, managing risk and making sure management,
council members, and the public are appropriately informed of key financial decisions.
1300 Clay Street, Suite 1000 Oakland, CA 94612 Main 510-839-8200 Fax 510-208-828*1
1.151 Quail Street, Suite 200 Newport Beach, CA 92660 Main 949-346-4900 Fax 510-208-8282
5901 W. Century Boulevard, Suite 750 ' Los Angeles, CA 90045 , Main 310-348-2901 Fax 510-2118-8282
Agreement No. 5941
J�KNN
public finance
In closing, we welcome the opportunity to help you in tackling your financing objectives. 1, Mark Young,
would be the primary contact person and am authorized by the firm to solicit business and enter into
contracts for KNIN. I am located at our Los Angeles office: 5901 W, Century Boulevard, Suite 750, Los
Angeles, CA 90045, and can be reached by phone: (310) 348-2901 or email: myoung@knninc.com.
Sincerely.,
Mark Young
Managing Director
cc: Scott Mitnick
1300 Clay Street, Suite 1000 Oakland, CA 94612 Main 510-839-8200 Fax 510-208-8282
1451 Quail Street, Suite 200 Newport Beach, CA 92660 Main 949-346-4900 Fax 510-208-9282
5901 '. Century Boulevard, Suite 750 Los �kngelcs, CA 90045 Main 310-348-2901 , Fix 510-208-8282
A Limited Lial'ilk". C ..... J -m
Agreement No. 5941
Table of Contents
\b()U[ KNN
Overview 1
History and Ownership I
Registration 1
Organizational and Management Structure 2
California Advisory Focus 3
Technology and Information Services 3
2, City I ",\Pellelice 4
California Cities 4
I 'N`v 1)
-7
4. Scopc oC Sci-vfccls
On -Call Advisory Services 7
Transaction Advisory Services
9
3. Rcfcr(:iiccs
6Nees 13
On -Call Advisory / Pre -Transaction Fees (Hourly) 13
Transaction Dees (Fixed) 13
Reimbursable Expenses 14
Appendix A: MSRB Rule G-42 Additional Disclosures
Agreement No. 5941
1. About k -NN
Overview
KNN Public Finance ("KINN") is an Independent Registered Municipal Advisor ("IRNUk"), registered as
a Municipal Advisor with both the U.S. Securities and Exchange Commission ("SEC") and the Municipal
Securities Rulemaking Board ("MSRB"). KNN provides municipal advisory services to a wide array of
state and local agencies in the State of California. Our clients include State agencies, cities and counties,
special districts, and school and community college districts. Headquartered in Oakland, with two
Southern California offices in Los Angeles and Newport Beach, KNN is among the largest advisory
firms based in California. The firm employs 19 professionals, including 15 advisors and four
administrative support personnel.
Our sole business is municipal advisory work with state and local governments and agencies. To
maintain our independence and have no conflicts of interest, we do not act as underwriter, swap
counterparty or other principal in a financing transaction, or as a placement agent for a direct placement
with a bank or other institution, As Municipal Advisor, we can propose and recommend ideas for a
financing or financing alternatives as a solution to a financing need.
The diversified back -grounds of our team, many of whom come from the public sector, rating agencies,
underwriting and legal communities, provide us with a broad perspective, Our practice is built on a
philosophy of providing comprehensive set -vice to our clients, and ensuring they make informed
decisions with regard to all aspects of their capital financing and debt management.
History and Ownership
KNN was first established in 1982 and operated for many years as Kelling, Northcross & Nobriga, Inc.
In 1997, KNN became a division of Zions First National Bank and later Zions Public Finance, Inc.,
though we continued to operate exclusively as a municipal advisor and had no affiliation with the bank's
broker-dealer business. In February 2016, a management group acquired the firm from Zions Bank.
This was precipitated by new Municipal Advisor regulations that came into effect in 2016, leading us to
separate from the bank to help us avoid any potential or perceived conflicts of interest in the future.
KNN is now 100% employee owned and operated, KNN is structured as a California Limited Liability
Company.
Registration
KNN and its advisors are registered as a Municipal Advisor with the SEC and the MSRB. Our MSRB
ID Number is K1151; our SEC File Number is 867-01996, and SEC CIK Number is 0001664477.
Please see the MSRB's and the SEC's websites:
• http://\vw-,v.msrb.org/i4ARegistrants.asDx
• https://w,,v-,v,sec.gov/cgi-bin/brow-,;e-
edgaracompany= KNN+ Public+ Fin ance&owner=exclude&action= petcomUany
All KNN advisors have taken and passed the MSRB Series 50 Financial Advisor exam.
Agreement No. 5941
The MSRB recently initiated the requirement for at least one member of a firm to pass a Municipal
Advisor Principal Qualification Examination (Series 54). The MSRB administered its first such exam this
summer, and five members of our firm, including Mark Young and David Brodsly, currently hold a Series
54 License.
Organizational and Management Structure
The firm employs 18 professionals, including 14 advisors and four administrative support personnel,
which exclusively perform municipal advisory work. 11 advisors and three administrative staff work in
our Oakland headquarters-, one advisor works in our Los Angeles office, and two advisors and one
administrative staff work in our Newport Beach office.
KINN is managed by David Leifer, Senior Managing Director. The firm has six principals: David Leifer,
Mark Young, David Brodsly, Joanna Bowes, Bobby Cheung, and Blake Boehm.
There have been no recent significant changes in our organization, and we do not expect any significant
changes in the near future.
WON
��Port 6f'rice.'
Blake 6nehiii
Ma.n4gIrig Dir&t6r
3ustin Rich
Vice"President
Agreement No. 5941
California Advisory Focus
KNN is a leading municipal advisory firm in the California public finance market, ranking among the
Top 3 Municipal Advisory firms in terms of par amount and number of transactions in California in most
years.' Over the last five years, KNN has served as advisor on over 487 transactions, totaling over $46.7
billion in issuance par — all for California issuers, In 2019, KNN was ranked 9"' nationally based on par,
despite our California focus (US Munidpals Reviev, Full Year 201P dated January 2, 2020). The importance,
however, is not in the rankings but in the depth of our leadership and experience in California municipal
finance — translating into real knowledge and resources to provide the highest level of service to the City.
The volume of issuance and diversity of our client base, exemplified by the table below, provides us with
a broad perspective as well as professional relationships that offer value in understanding the latest trends
in public finance, Our firm culture and practice promote open communication and collegiality among
our professionals, so that all our clients benefit from our collective experiences.
KNN California Financing Experience by Issuer Type (January 1, 2015 — February 21, 2020)2
Cities
66
$ 3,526,635.028
23
Counties
67
5,534,381,390
24
K-12 School Districts
154
8,979,181,760
40
Community College Districts
59
7,189,305,008
26
Special Districts
21
678,614,984
12
Transportation Agencies
9
1,473,710,000
4
State & State Agencies
ill
19,313,710,000
9
Total
487
$46,695,538,170
Technology and Information Services
While our primary resources are the experience, skill, judgment and integrity of our staff, we invest
heavily in technology and information services. We subscribe to both Bloomberg and Thomson
Municipal Market Monitor Services C'TMY), investing more than $75,000 annually, which provide
virtually boundless resources of historical and upcoming pricing data, various market indices and
statistics. We use this data, among other purposes, for interest rate planning assumptions, to monitor
market conditions and to inform out price views while working on negotiated sales.
Our debt structuring and analytic capabilities are supported by our subscription to bond sizing software
known in the industry as "DBC". Our DBC package includes, Project Finance, which coordinates
interdependent projects under a common plan of financing to optimize complicated financing solutions.
In addition to debt structuring, our staff are well versed in developing a wide variety of cash flow models
customized to the specific requirements of each of our clients.
,As a result of the number of transactions we complete in California, we are in frequent contact with all
the active underwriting desks. With our access to market information from information services and
direct relations, combined with our long history of pricing California paper and strong analytical skills, we
Source: Thomson Reuters
Includes experience of KNN advisor, since February 2016 at KINN Public Finance, LLC and prior to Februan, 2016 at KNN Pobtic I"inance, a division of
Zions Firq National Bank and a th-6,,im of lions Public Finance, Inc, Applies to all table., hercin dared prior to February' 201 O.
Agreement No. 5941
leave no stone unturned in our efforts to achieve the most favorable pricing results possible on behalf of
our clients.
C I -I X
-tv E' perict-ice
California Cities
KNN has a practice group focused on California cities. We have had the opportunity to serve as
municipal advisor to an eclectic mix of small and medium sized cities, located throughout the State, as
well as some of the largest cities in California. Below we have included a list of some of our recent city
clients, Much of the experience gleaned from these clients can be applied to the City and your financing
needs.
KNN City Clients (January 1, 2015 - February 25, 2020)
Bell
Livermore
Poway
Davis
Lompoc
Rolling Hills Estates
East Palo Alto
Long Beach
San Diego
Emeryville
Los Angeles
San Francisco
Fremont
Manhattan Beach
Santa Barbara
Fresno
Marina
Santa Clara
Gardena
Morgan Hill
Santee
Huntington Beach
Newport Beach
Vacaville
Lathrop
Oakland
13
General Obligation Bonds
193
$16,007.412,270
4
$ 328,780,000
Revenue Bonds
105
17,224,367,108
12
420,520,000
Lease Revenue Bonds / Certificates of Participation
78
6,355,362,125
17
805,952,125
Commercial Paper
38
2,136,757,000
4
1,170,000,000
TRANS /BANs
19
1,677,584,499
2
154,035,000
Land Secured Bonds
13
220,822,903
11
171,382,903
PACE and Energy Financings
7
78,632,265
0
0
Successor Redevelopment Agency Bonds
22
908,590,000
16
475,965,000
Pension Obligation Bonds
7
1,741,740,000
0
0
Other Bonds
5
344,270,000
0
0
Total
487
$46,695,638,170
66
$3,626,636,028
Agreement No. 5941
Besides our extensive experience in financing transactions, we bring a special expertise to the non -
transaction side of the financial advisory business, helping many entities formulate long-term financing
plans and develop written policies. We also apply consummate diligence in the area of disclosure,
recognizing that this represents the area of greatest risk to the individuals we work with at municipal
issuers
I T
I t -,,-NLN Personticl
We have assembled a very senior and seasoned team to serve the City. Mark Young, Managing
Director, would serve as the lead municipal advisor and project manager for the City. He will be
supported by David Brodsly, Managing Director, and Larry Lor, Vice President. KNN's proposed
core team has significant experience covering many of California's largest and most complex municipal
issuers. Our team members bring forth complementary skill sets and regularly work together to bring our
clients the specific expertise needed for each transaction.
Our team approach to client coverage lets us rely on the strengths of various individuals to maximize the
collective quality of out service. Also, by having more than one advisor actively working the assignment,
we can ensure that an advisor with real knowledge of your project or transaction is always available to
meet your needs.
Mark Young, Managing Director
Mark joined I -NN Public Finance as Managing Director in June 2014 and opened KNN's Los Angeles
office. Mr. Young brings over 34 years of experience serving municipalities and has worked on over $35
billion in short and long-term debt, Mr. Young's experience includes serving both as financial advisor and
investment banker, most recently as a Managing Director and Co -Head of the Western Region for Loop
Capital Markets, Prior to Loop, he was a Principal at the financial advisory firm of Gardner, Underwood
& Bacon LLC.
Mark has advised or led financings for just about every type of municipal credit, including: general
obligation, lease revenue, pension obligation, tax aflocation/increment, special tax/assessments, port
revenue, water/sewer revenue, and school district general obligation. The depth and diversity of his
experience provides important value in approaching client engagements.
His clients have included the counties of Los Angeles, San Bernardino and San Diego, the cities of Los
Angeles, San Diego, Long Beach, Manhattan Beach, Redondo Beach, Newport Beach, Rolling Hills
Estate and Phoenix, San Diego and Los Angeles Unified School Districts, Long Beach Airport, the Port
of Los Angeles, the Los Angeles Department of Water and Power and the Metropolitan Water District of
Southern California,
Mr. Young has a B.A. in Economics with departmental honors from the University of California,
Berkeley. Mark currently serves as the Vice Chairman of the City of Palos Verdes Estates Finance
Advisory Committee. Additionally, Mark serves on the Compliance Advisory Group to the MSRB Board
of Directors. Mark holds Series 50 and Series 54 Municipal Advisor Licenses.
address: 5901 W. Century Blvd., Suite 750, Los Angeles, CA 90045 - phone; 310-348-2901 • erna&
myoung@,knninc.com
Agreement No. 5941
David Brodsly, Managing Director
David has more than 38 years' experience in municipal finance. He joined KNN early in 1998 to lead
KNN's city, redevelopment and special district consulting practice, and he serves as financial advisor to a
number of agencies throughout the State. Among the agencies with which he has worked are the cities of
Los Angeles, San Francisco, San Jose, San Diego, Fresno, Oakland, Santa Barbara, Daly City, Davis, F.1k
Grove, Mission Viejo, Santee, and Santa Clara; Alameda, Orange and San Bernardino counties; and a
number water and transportation special districts, including the Bay Area Water Supply and Conservation
Agency. His tax allocation experience includes new money issues before dissolution, as well as several
post -dissolution refundings, including the Los Angeles County local successor agency refunding program,
Orange County, and the cities of Santee and Davis.
For nearly six years, Mr. Brodsly was a Vice President and Senior Credit Officer with Moody's Investors
Service. He served as a senior member of the analytic and management team responsible for all types of
local government bond and note ratings on the Pacific Coast, and was a member of Moody's national
rating committee.
Prior to joining Moody's, David spent over 12 years with the City of Los Angeles, where he was
responsible for financial planning, debt issuance, and bond administration for general government
departments of the City of Los Angeles.
David is a graduate of the University of California, Santa Cruz, and the author of L.A. Freenwjt: An
Appreciative Essay, published by UC Press. He is a frequent speaker on public finance issues and is a
regular faculty member in the educational prograrns of the California Debt and Investment Advisory
Commission. David was also one of the four members of CDIAC's Debt Primer Advisory Group,
assisting in the rewriting of that core public finance document. David holds Series 50 and Series 54
Municipal Advisor Licenses.
address: 1300 Clay Street, Suite 1000, Oakland, CA 94612 - phone- 510-208-8205 - email: dbrodsty@,knninc.com
Larry Lorn, Vice President
Larry joined KNN in 2013, and currently provides analytical and transactional support for KNN's
practice groups and leads continuing disclosure services.
Larry has served as financial advisor to numerous public governments, including the State of California;
Fresno, Kern, Monterey, San Bernardino, and Tulare counties; cities of East Palo Alto, Long Beach,
Manhattan Beach, Poway, Huntington Beach, Rolling Hills Estate, Santee and San Diego; school districts
including Grossmont Union HSD and San Diego USD; as well as special districts such as Contra Costa
Transportation Authority, Santa Barbara County Association of Governments, United Water
Conservation District to name a few.
Larry earned his master's degree in International Affairs, with specializations in Finance and
Management, from Columbia University and his B.A. in International Studies: Economics from the
University of California, San Diego. Larry holds a Series 50 Municipal Advisor License,
address: 1300 Clay Street, Suite 1000, Oakland, CA 94612 - phone; 510-208-8208 - email: 11om(@.knninC.C()M
Agreement No. 5941
4. Scope of Services
INN takes a holistic and strategic approach to make sure a potential transaction fits within longer-term
financial and policy goals. We are committed to developing a robust plan of finance and evaluating
alternatives in terms of cost, legal constraints, credit, investor concerns, and public policy to support
balanced recommendations. There are numerous tradeoffs in the development of a capital plan: the
relationship of direct funding through pay -as -you go as compared to the issuance of debt; the structure of
the bond issue in terms of maturity and debt service structure; the integration of debt structure into
reserve, rate setting and other financial policies; and ongoing administrative responsibilities. In advance
of any bond offering, we will begin by working with City staff to understand your financing needs and
objectives and to build an enhanced knowledge of your general fund and enterprise credits.
On -Call Advisory Services
We consider most planning or pre -transaction work as "on-call" advisory. In addressing these areas, we
operate as an extension of staff, meeting any financing needs, financial analyses, and finance related issues
that may or may not be directly attributable or result in a bond financing. On any given assignment, we
will prepare a detailed time and responsibilities schedule to ensure that project and financing objectives
are met under the required timeframes.
Strategic -1
Planning. In our planning work-, we would expect to review documentation, financial data
and existing planning models, as well as conduct meetings and conference calls with staff to best
understand your priorities. Upon the conclusion of the review of your needs and objectives, we would
work with you to develop an approach and work- plan specific to the assignment. bNN has notable
experience assisting with long-term strategic financial planning, including providing debt capacity review
studies and developing debt affordability models. Updates to cash flow models and/or the development
of debt affordability models will provide the means to determine debt capacity, and its integration with
the City's Capital Improvement Program.
Financial Modeling. An important component of our technical competence is our staffs ability to
build, improve, and manage custom financial models. For many of our revenue bond clients, we have
created and maintain the revenue and expenditure cash flow models that they continue to use to manage
their programs. Our team has built numerous such models from scratch, as well as reviewing and
adapting existing cash flow models to support a financing program. Overall, our models or our
enhancements to existing models are designed to be comprehensive. We construct the models to make
assumptions and results obvious and to facilitate changes in assumptions.
Debt Portfolio Analysis. We view one of our key toles is to provide ongoing monitoring of your
outstanding debt portfolio, including the refunding of fixed rate obligations for savings or restructuring
variable rate obligations through the renewal/replacement of bank credit facilities or other products. In
addition, serving as Independent Registered Municipal Advisor C'IRNIA") to many of our clients, we are
accustomed to reviewing unsolicited proposals from market participants and underwriters and evaluating
and monitoring refunding opportunities,
Ongoing Debt .Reporting. There are a number of areas pertaining to the ongoing management of your
debt programs where we would assist as may be needed. For example, California SB 1029 requires that
upon the issuance of any new debt after January 2017 that the City prepare an annual debt transparency
report for each debt issue to track expenditure proceeds, debt authorization and debt service.
Agreement No. 5941
Additionally, California SB 450, signed into law on October 9, 2017, requires the governing body of a
local issuer to obtain and disclose, prior to authorization of the issuance of bonds, good faith estimates of
the following information in a meeting open to the public: i) TIC of the bonds; ii) fees paid to third
parties; iii) bond proceeds net of fees; and iv) total debt service. KNN can assist the City in the
preparation of its staff report on any given bond issue to address these areas.
Policy Review And Updates, Policies have a direct impact on capital financings including reserves,
revenues, bond issuance and management, financial reporting and capital asset management. As financial
policies are a key criterion in the rating review, we would work with you to ensure your policies (reserve,
debt, and disclosure) adequately balance your needs and industry standards.
COntit-Ming Disclosure Practices. In an increasingly scrutinized regulatory environment, KNN can
assist with areas of continuing disclosure. KNN takes a very thorough approach and goes beyond the
minimum filing responsibility of a Dissemination Agent. For each issuer, we review and catalog in a
database of all reporting requirements listed within each continuing disclosure agreement ("CDA").
Databases are regularly updated for new CDAs and matured bond issues.
For annual reporting requirements, we correspond with issuers to facilitate production; collect reporting
information, including contracting with outside data services; collect the issuer's financial statements; and
prepare and submit reports to EMNUV We provide filing confirmations and copies of annual reports to
issuers.
For event -based reporting, we communicate with issuers to determine if any significant events have or
are expected to occur. We also regularly track certain event -based disclosures such as notices for rating
changes, redemptions and defeasances, and prepare and file event notices as needed.
Our involvement in continuing disclosure allows us to add value outside of the annual/event filings.
With the knowledge of a clients' continuing disclosure obligations and undertakings, we help verify third -
party disclosure reviews during a public financing and proactively comment on the disclosure
representations of an offering document. We also review new CDAs for consistency with prior CDAs
and recommend updates as needed.
Staffand Council Trainino, KNN
advisors are experienced in leading
presentations before councils and
community groups. Our team will
provide support in preparing
presentations and staff reports and
providing back-up analyses. We also
offer "Bonds 101" educational
serninars for the City's Council
members and staff, as needed and
arrange for disclosure training to be
provided by Disclosure Counsel.
Additional "syn -Call" Adviso"-
Services. To the right we display
non -transaction related services that
we often provide. In fact, it is in these
• Resource for General Financial Analysis
and Market Conditions
• Analysis of Financial Alternatives and
Development of a Plan of Finance
• Cash [low Modeling and Analysis
(Revenue Bonds, Capital Financing
Plans)
• Risk/Benefit Analysis of Financing
Strategies and Debt Structures
• Debt Affordabilitv Review
• Debt Policy Development
• Pension, OPRB, and Liability Analysis
• Creation of Facility District,; and
Assessment Districts
• "Best Practices" for Disclosure and
Post -Issuance Compliance and
Reporting
• NfonitoringofOutstaridbig DebtRefunding
Opportunities and Restructuring Needs
• Variable Rate Remarketing Oversight
• LOC/Liquiditz '/Direct Purchase Bank
Procurement
• Rating Agency Strategy and Ourx"ch
Programs
• Investor Outreach and Relations programs
• Prcscntadows and Agenda Items for
Council/Boatdand Finance Committee
NICefings
• "Bonds 101" Educational workshops for
staff and Board
• Condon* Disclosure Report Preparation
and Dissemination,
• Evaluation of Underwriter Proposals
{Solicited and Unsolicited)
Agreement No. 5941
areas where we believe we provide the most value. Overall, we are prepared to assist the City in virtually
any area that may have financial and debt implications.
Transaction Advisory Services
K -NN has the experience, capabilities, and resources to add value in all areas of your Scope of Services.
Below we outline our approach to providing the requested Scope of Services, highlighting key areas
where we believe we can provide the most value.
We expect most of the transaction to take place over conference calls, including calls for working group
check -ins, rating agency, bond insurers, investor and pricing and closing. In-person meetings would be
kept to a minimum and would include the "Kick -Off" meeting.
DeN,clop the Financing Timetable. We take ownership of the financing schedule and distribution Est
to make sure that the City's required milestones are met and that all members of the team understand
their assignments and deadlines. We will be your strongest advocate in ensuring the financing process
goes smoothly and according to the timetable envisioned. The schedule will focus on major stages in the
He cycle of a transaction.
Monitor the Transaction Process. As part of taking ownership of the financing schedule and
facilitating the roles of team members, KNN will actively assist with administrative matters throughout
the financing process (even beyond closing if needed). We regularly correspond with parties and do
preparations for matters including but not limited to onboarding, invoicing, rating application forms,
official statement hard cop), orders, and closing memorandums. Furthermore, the schedule includes
working group conference calls to discuss progress, deliverables, and scheduling. These regularly
scheduled calls are effective at keeping parties on task and accountable and ensures the City's timeframe
is met.
Assist in the Selection of Additional ScrVice ProN,41crs. KNN can assist with the RFP process to
complete the staffing of financing or project teams, including the necessary due diligence and selection of
underwriter(s) for a negotiated sale as well as obtaining bids from bond and/or disclosure counsel firms,
trustee banks, fiscal consultants, verification agents (if needed), bond insurers and printers. For all RFP
responses, we will summarize key areas in a side by side comparison for the City. As we've touched
upon, we facilitate activities of all team members, assist the City in defining team member roles and
responsibilities and track team member performance.
Provide Financial Advice to the City, relating to Financing Docun-ictits. We review and comment
on all legal, disclosure and closing documentation. We help to highlight the key policy decisions
imbedded in legal covenants, and we help ensure that your disclosure documents protect the City in this
era of increased regulatory scrutiny. For offering documents, we thoroughly review any "canned"
language to make sure it properly characterizes the current facts and circumstances of a given issuer,
undertake due diligence of disclosure facts, and draft accurate updates of evolving disclosures items. Our
leadership in this area is well recognized. For example, the City of Los Angeles has relied on KNN to
serve as its disclosure consultant for 17 years.
Compute Sizing and Design StruCtUrC of Dcbt Issue. KNN's in-house team of quantitative experts
routinely perform all the bond structuring, pricing analysis, and quantitative analysis in connection with a
financing engagement. We typically lead the structuring process with the input of the client and work side
by side with the underwriter (if negotiated sale) to develop the structure for each specific bond issue and
Agreement No. 5941
ensure that all potential options are properly evaluated. As a rule, we recommend the use of relatively
conservative debt assumptions in Financial planning, and we carefully review with the client the
advantages and disadvantages of alternative structuring scenarios.
Plan and Coordinate Presentations to Rating Agencies and Investors. We manage the credit rating
strategy and approach for virtually all our clients and have helped numerous clients prepare successful
rating presentations to all of the (now four) rating agencies. We have assisted many clients in obtaining
rating upgrades. As a transaction advisor, we take ownership of the rating process by preparing the rating
presentation, facilitating rating discussions, scheduling, as well as attending and helping clients prepare for
rating meetings.
Working with the senior managing underwriter (if a negotiated sale), we develop an investor electronic
roadshow presentation (if applicable) to highlight the key credit features of your offering. We are also
accustomed to facilitating direct contact between City staff and key national institutional buyers to
educate the "buy -side" about the credit strengths of the City's offering and to stimulate demand for the
bonds. KNN maintains a list of investor contacts at most of the major municipal bond investment firms
and we actively engage these contacts ahead of any given transaction. This pro -active approach can
increase the number of investors that pre -qualify your credit and can result in lower interest rates at the
time of pricing.
Furthermore, as part of the credit structuring, KNN continues to have active relationships with credit
enhancement providers (e.g. letters of credit, bond insurance and surety reserves) and can assist the City
in evaluating such products as well as soliciting providers. The use of bond insurance has been limited
following the 2008 Great Recession and numerous insurer downgrades. Assured Guaranty Municipal
and Build America Mutual Assurance are the two remaining major players. They both offer "AA" S&P
insured ratings (which is more relied upon than the Kroll "AA+" for AGNI). A surety reserve policy in
lieu of a fully funded debt service reserve may be useful and cost effective. In today's market, a highly
rated credit, in the "AA" category, can likely issue bonds without a reserve fund and face no rating or
market penalty,
COOdUCt Market Atialvsis and Eval Mite Tithing of Nbrkct Entry. As your partner from beginning to
end of the financing process, our role is to ensure that your credits optimally approach the market at
pricing. Below we thoroughly discuss how we would assess the markets in preparation for any of your
bond issuances with the overall objective of ensuring the lowest cost of borrowing on the day of sale.
Monitor Interest Rate Environment. As previously mentioned, we maintain access to a broad
array of paid subscription services to monitor market conditions. We provide our clients with weekly
market updates, economic and interest rate data points and update bond structures (and savings
results) consistently throughout the transaction process. We are active in adapting bonds structures
and transaction sizing based on evolving market conditions to ensure that there are no "surprises"
closer to the pricing date.
Target Issuance Timing. Utilizing TM3, Bloomberg, and our personal relationships with
underwriting desks, we compile a complete schedule of upcoming transactions and key economic
releases to avoid particularly busy supply slates {down to even the particular time slots on a given
day), or market -moving economic data, either of which could complicate a sale. Depending on the
size of a sale and timelines for raising funds, we typically recommend staying attentive to macro -
market factors and supply calendars in timing your issuance to optimize your market timing.
Agreement No. 5941
Identify Pricing Comparables. With an active California 'issuance practice and given our team
structure and strong internal communication, we all share in and benefit from the broader experience
of our colleagues. This ensures we remain current on a diverse spectrum of pricings, investor
preferences, and issuance trends. Leading into pricing, we share a summary of pricing expectations
with our clients to serve as a benchmark by:
• Developing our own benchmark pricing scales or ranges, based on recent sales of comparable
credits and secondary market trades, all examined as spreads to Municipal Market Data
{"MMD"). We subscribe to the full complement of MMD indices, including interpolated month -
by -month MMD, daily sector and state -specific yield curves, intra -day reads, and closing recaps.
• Analyzing comparable pricing yield and spread data detailing specific transaction elements --
rating
rating category, credit and issuer sectors, couponing, call features, and maturities among other
factors. We summarize such data in a spreadsheet such that your proposed pricing can be readily
evaluated to the benchmark comparables.
• Evaluating alternative coupon structures to adequately balance yield to maturity, savings and
future optionality. We closely monitor to the spread differential between a mix of coupons — 3%,
1 MIX
4%, and 5% structures and analyze the value of pursuing one structure over the other.
Using various MMD indices, actual pricing data, feedback from non -participating desks and, perhaps
most importantly, our own judgment and experience to make appropriate adjustments to each
comparable to derive our own pricing view as a reference.
Coordinate Competitive Sale of Bonds. b,.NN has demonstrated significant expertise and experience
managing both competitive and negotiated bond sales. In a competitive sale, we actively review the
Notice of Sale and reach out to bidders to increase the visibility of the sale and make the bidding process
user-friendly.
Recornniend Award of Debt ISSUance. In a competitive sale, we would verify all bids to ensure the
proposed bond pricing/structures meet the City's desired result and that Notice of Sale parameters are
met. The award is then given to the lowest cost conforming bid. The remainder of this discussion
concerns the negotiated sale. We are recognized among underwriting desks as "tough but fair," because
our pricing negotiations are based on a sound understanding of the market and verifiable market
information.
We perform a complete analysis of the underwriter's proposed scale, not just a quick comparison
of the comparable yields and play a pro -active role in negotiations with the undetwriter before
and during the order period;
■ We closely monitor the book of orders by maturity and advise regarding any adjustments to the
scale based on the number and quality of orders.
In evaluating the underwriter's pricing proposals against our benchmarks, we take into account the tone
of the market, the relative depth of demand for the issue or particular maturity and feedback from the
presale marketing. When we suggest lower yields, we proxide the rationale for why. Negotiating the final
price adjustments is largely a function of orders but final adjustments can be affected by the n
e tNyp and
amount of orders, the direction of the market, orders in adjacent maturities and new information on
other pricings.
Agreement No. 5941
Coordination of Pre -Closing and Closing Acti\,Jties. As previously discussed, Nve actively monitor all
stages of the financing. We regularly correspond with parties to facilitate the production of closing
documents, the final official statement, invoicing, closing memorandums and closing call scheduling.
n r
Ceferences
Municipal Advisor(s): Mark Young, Larry Loth
Length of Engagement: INN since 2018
Deal Types and Size: We are currently advising on the City's 2020 Pension Obligation
Bonds estimated at $440,000,000 of par value
Work Performed: General municipal advisor, including financial planning and policy
development, and pension obligation bonds.
01,005101-100
Bruce Moe, City Manager
1400 Highland Avenue
Manhattan Beach, CA 90266
Phone; (310) 802-5053
Email: bmoe@cit),mb.info
Municipal Advisor(s): Mark- Young, Larry Loth
Length of Engagement: Mark Young since 1998; KNN since 2015
Deal Types and Size:
$106,255,714 par value total aggregate
CODs, POBs, Limited Obligation Bonds
Work Performed: General municipal advisor, including financial planning and policy
development, certificates of participation/lease revenue bonds,
assessment bonds, and pension obligation bonds.
Agreement No. 5941
11 F12 0
171". -it
David Nakarnoto, City Treasurer
CITY OF 411 West Ocean Boulevard, 6"' Floor
LONG,- Long Bcac h, CA 90802
Phone: (562) 570-6843
Email: da-kid.nakamoto@longbeach.gov
Municipal Advisor(s): Mark Young, Larry Lom
Length of Engagement: Mark Young since 2002; KNN since 2015
Deal Types and Size: $400,000,000+ par value total aggregate
Lease Revenue Bonds, Revenue Bonds, Sewer Revenue Bonds, PCBs,
TABS, Mello -Roos
Work Performed: General municipal advisor for financial planning, lease revenue bonds,
redevelopment, pension, airport, water/sewer, tidelands revenue, and
Mello -Roos formation and financing,
6. Fees
KNN's standard approach to billing is to charge transaction services (i.e. financings) on a fixed/capped
fee basis and on-call advisory or pre -transaction work (i.e. modelling/planning) on an hourly basis.
On -Call. Advisory / Pre -Transaction Fees (Hourly)
For on-call financial advisory (e.g. policy development, new
Title Hourly Fee
project analysis, debt capacity studies, etc.) and pre-
Managing Director $325
transaction services (e.g. development of cash-flow model,
Director $300
preparation of a plan of finance, analysis of alternative
Vice President $275
financing approaches, presentations to staff and Council,
Assistant Vice President $245
etc.), we customarily propose billing based on hourly rates.
Associate $215
Our standard hourly fees are provided in the adjacent table,
Analyst $190
Transaction Fees (Fixed)
For advisory services related to debt offerings, KNN typically negotiates fixed fees at the time the plan of
finance is known, based on factors that impact complexity
Transaction Type Fee Range
and time commitments, such as bond structure, credit
General Obligation Bonds $35,000 - $60,000
structure, financing vehicle, interest rate mode, and the
Lease Revenue Bonds or COPS $35,000 - $60,000
method of sale. Typically, fixed transaction fees are paid
Enterprise Revenue Bonds $35.000 - $60,000
from bond proceeds (i.e. cost of issuance) and payment is
Refunding Tax Allocation Bonds $40,000 - $65,000
often contingent on the successful closing the bonds. The
Special Assessment Bonds $45,000 - $70,000
adjacent table provides a range of fees we would expect to
Mello -Roos Bonds $45,000 - $70,000
negotiate from. We do note that contingent fee structures
Agreement No. 5941
do raise a potential conflict of interest, which is addressed in our MSRB G-42 disclosure statement
contained in Appendix A.
While we do not strive to be the low-cost provider of municipal advisory services and prefer to work in
environments where the emphasis is on doing the job thoroughly to high standards, we also strive to be
cost-efficient and competitive. We have found that we can always agree on a level of fees that is mutually
acceptable and are open to negotiating whatever compensation approach the City deems appropriate.
Reimbursable Expenses
X -NN seeks reimbursement for a limited number of out-of-pocket expenses, such as conference cam
services, color copying and statistical data obtained from outside sources. We would also seek
reimbursement for air travel and hotels. Such costs should be minimal and would be capped at $2,500.
Agreement No. 5941
AppendIX JNUNMSRB Rule GY-42 'Additional Disclosures
MSRB Rule G-42
Disclosure of Conflicts of Interest and Legal or Disciplinary Events
Pursuant to Municipal Securities Rulemaking Board ("MSRB") Rule G-42, on Duties of Non -Solicitor Municipal
Advisors, Municipal Advisors are required to make certain written disclosures to clients which include, amongst
other things, Conflicts of Interest and any legal or Disciplinary events of KNN Public Finance, LLC ("KNN
Public Finance") and its associated persons.
Conflicts of Interest
Other Municipal Advisor Relationqhins. KNN serves a wide variety of other clients that may from time to time
have interests that could have a direct or indirect impact on the interests of another KNN client. For example,
KNN serves as municipal advisor to other municipal advisory clients and, in such cases, owes a regulatory duty to
such other clients just as it will to your entity, if hired. These other clients may from time to time and depending
on the specific circumstances, have competing interests. In acting in the interests of its various clients, KNN could
potentially face a conflict of interest arising from these competing client interests. KNN fulfills its regulatory duty
and mitigates such conflicts through dealing honestly and with the utmost good faith with its clients.
Compensation. KNN Public Finance represents that in connection with the issuance of municipal securities, KNN
Public Finance may receive compensation from an Issuer or Obligated Person for services rendered, which
compensation is contingent upon the successful closing of a transaction and/or is based on the size of
transaction. Consistent \vith the requirements of MSRB Rule G-42, KNN Public Finance hereby discloses that
such contingent and/or transactional compensation may present a potential conflict of interest regarding KNN
Public Finance's ability to provide unbiased advice to enter into Such transaction. This conflict of interest will not
impair KNN Public Finance's ability to render unbiased and competent advice or to fulfill its fiduciary duty to the
Issuer,
If KNN Public Finance becomes aware of any additional potential or actual conflict of interest after this disclosure,
KNN Public Finance will disclose the detailed information in writing to the Issuer in a timely manner.
Legal or Disciplinary Events
KNN Public Finance, LLC, has never been subject to any legal, disciplinary or regulatory actions nor was it ever
subject to any legal, disciplinary or regulatory actions previously, when it was a division of Cions First National
Bank or Zions Public Finance, Inc.
A regulatory action disclosure has been made on Form MA -I for one of KNN Public Finance municipal advisory
personnel relating to a 1998 U.S. Securities and Exchange Commission ("SEC") order that was Filed while the
municipal advisor was employedwith a prior firm, (not KNN Public Finance). The details of which are available
in Item 9; C(l), C(2), C(4), C(5) and the corresponding regulatory action DRP section on Form MA and Item 6C
(1), (2), (4), (5) and the corresponding regulatory action DRP section on Form MA -I. Issuers may electronically
access KNN Public Finance's most recent Form MA and each most recent Form MA -1 filed with the Commission
at the following website: xv-xvxv-sec.gov/edtrar/se-,ii-chedoar/coinnanvsearch,html.
The SEC permits certain items ofinformation required on Form MA and Form MA -1 to be provided by reference
to such required information already filed on a regulatory system (e.g., FINRA CRD). The above noted regulatory
action has been referenced on both Form MA and MA -1 due to the information already filed on FINRA's CRD
system and is publicly accessible through BrokerC heck at 11ttp://brokercheck.finra.org. For purposes of accessing
such BrokerCheck information, the Municipal Advisor's CRD number is 4457537.
There has been no change to an), legal or disciplinary event that has been disclosed on KNN Public Finance's
original SEC registration Form MA filed on February 8, 2016 or Form -MA-l's filed on January 22, 2016.