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AG 24-061 - LAW OFFICE OF ALAN L. PASTERNECKRETURN TO: EXT: CITY OF FEDERAL WAY LAW DEPARTMENT ROUTING FORM 1. ORIGINATING DEPT./DIV: Finance 2. ORIGINATING STAFF PERSON: Steve Groom EXT: 2520 3. DATE REQ. BY: asap 4. TYPE OF DOCUMENT (CHECK ONE): ❑ CONTRACTOR SELECTION DOCUMENT (E.G., RFB, RFP, RFQ) ❑ PUBLIC WORKS CONTRACT ❑ SMALL OR LIMITED PUBLIC WORKS CONTRACT * PROFESSIONAL SERVICE AGREEMENT ❑ MAINTENANCE AGREEMENT ❑ GOODS AND SERVICE AGREEMENT ❑ HUMAN SERVICES / CDBG ❑ REAL ESTATE DOCUMENT ❑ SECURITY DOCUMENT (E.G. BOND RELATED DOCUMENTS) ❑ ORDINANCE ❑ RESOLUTION ❑ CONTRACT AMENDMENT (AG#): ❑ INTERLOCAL ❑ OTHER 5. PROJECT NAME: OALICB Unwinding - New Market Tax Credit legal representation 6. NAME OF CONTRACTOR: Law Office of Alan L. Pasternack ADDRESS: PO Box 11636, Portland OR, 97211-3857 TELEPHONE 503-312-9273 E-MAIL; Alan@Apasternack.com FAQ{: SIGNATURENAME: Alan Pa$ternaCk TITLE 7. EXHIBITS AND ATTACHMENTS: A SCOPE, WORK OR SERVICES ❑ COMPENSATION ❑ INSURANCE REQUIREMENTS/CERTIFICATE ❑ ALL OTHER REFERENCED EXHIBITS ❑ PROOF OF AUTHORITY TO SIGN ❑ REQUIRED LICENSES ❑ PRIOR CONTRACT/AMENDMENTS 8. TERM: COMMENCEMENT DATE: 04-04-2024 COMPLETION DATE: est. 12-31-2024 9. TOTAL COMPENSATION $ 675/hr . (INCLUDE EXPENSES AND SALES TAX, IF ANY) (IF CALCULATED ON HOURLY LABOR CHARGE -ATTACH SCHEDULES OF EMPLOYEES TITLES AND HOLIDAY RATES) REIMBURSABLE EXPENSE: EYES ❑ NO IF YES, MAXIMUM DOLLAR AMOUNT: $ IS SALES TAX OWED 10YES ONO IF YES, $ PAID BY: ❑ CONTRACTOR ❑ CITY RETAINAGE: RETAINAGE AMOUNT: ❑ RETAINAGE AGREEMENT (SEE CONTRACT) OR ❑ RETAINAGE BOND PROVIDED A PURCHASING: PLEASE CHARGE TO: 115-5800-115-558-20-490 10. DOCUMENT/CONTRACT REVIEW INITIAL / DATE REVIEWED INITIAL / DATE APPROVED ❑ PROJECT MANAGER R DIRECTOR SMG/04-04-2024 ❑ RISK MANAGEMENT (IF APPLICABLE) ❑ LAW JRC 4/4/2024 11. COUNCIL APPROVAL (IF APPLICABLE) COMMITTEE APPROVAL DATE: COUNCIL APPROVAL DATE: 12. CONTRACT SIGNATURE ROUTING ❑ SENT TO VENDOR/CONTRACTOR DATE SENT: DATE REC'D: ❑ ATTACH: SIGNATURE AUTHORITY, INSURANCE CERTIFICATE, LICENSES, EXHIBITS ❑ CREATE ELECTRONIC REMINDER/NOTIFICATION FOR 1 MONTH PRIOR TO EXPIRATION DATE (Include dept. support staff if necessary and feel free to set notification more than a month in advance if council approval is needed.) INITIAL / DATE SIGN Pf ❑ LAW DEPARTMENT AT © SIGNATORY (MAYOR OR DIRECTOR) tl 'fp2, CITY CLERK ASSIGNED AG# A # - Cv" COMMENTS: Alan Pasternack was involved in the establishment of OALICB and the New Market Tax Credit financing structure, continues to do similar transactions routinely, and continues to work in concert with teh other principals in the deal structure and unwinding (i-e. CapitolOne, Novogradac, Reynold Roeder) 212R3 7 LAW OFFICE OF Air ALAN L. PASTERNACK Law Office of Alan L Pasternack, LLC PO Box 11636 Pordand, OR 97211-3857 alan@apasternack.com 503.312.9273 April 2, 2024 Mr. Steve Groom Finance Director City of Federal Way 33325 8t' Ave. So. Federal Way, WA 98003 RE: Legal Services for the City of Federal Way I FW PAEC QALICB - NMTC Unwind Dear Mr. Groom: I am writing to thank you for retaining the Law Office of Alan L. Pasternack, LLC (this "Firm", sometimes referred to as "l", or "we" or similar terms) to serve as special counsel to the City of Federal Way, a Washington municipal corporation ("Sponsor"), and FW PAEC QALICB, a Washington nonprofit corporation ("QALICB"), in connection with unwinding the 2017 financing transaction the ("NMTC Financing") for the development and construction of a new community performing arts center and related facilities in Federal Way, Washington (the "Project") using Federal New Markets Tax Credits ("Federal NMTCs") available under Section 45D of the Internal Revenue Code of 1986, as amended (the "Code"). This letter will also serve to describe the terms of our engagement and is effective as of the date hereof. Capitalized terms used but not defined herein have the meaning ascribed to such terms under Section 45D of the Code and the appliable Treasury Regulations. Scope of Engagement. The scope of this engagement is limited to serving as special counsel to the Sponsor and QALICB in connection with the specific actions required to unwind the NMTC Financing (collectively, the "Unwind"). Note that from the standpoint of the Tax Credit Investor and CDEs, the "unwind" occurs when the put or call option have been exercised, the Investor's membership interest in the Investment Fund has been transferred, and the membership interests of such Investment Funds in the Sub-CDEs have been redeemed or otherwise transferred in exchange for the transfer to the applicable Investment Fund of the promissory notes memorializing the loans from the CDEs (referred to herein as the "Investor/CDE Exit"). There will be certain additional steps for Sponsor and QALICB to take following or concurrently with the Investor/CDE Exit to complete the Unwind. Mr. Steve Groom Finance Director City of Federal Way Page 2 April 2, 2024 The specific services I will provide will be limited to advising Sponsor and QALICB in connection with the Unwind (the "Transaction Services"). I expect that the Transaction Services will include (i) reviewing transaction documents from the original NMTC Financing, as needed, (ii) participating in periodic conference calls with you and your other advisors, as well as the CDEs and Investor that participated in the NMTC Financing and their counsel, (iii) preparing or reviewing such documentation as may be necessary or appropriate to effect the Investor/CDE Exit, and (iv) preparing such additional documentation as may be necessary or appropriate to complete the Unwind following the Investor/CDE Exit. The Transaction Services will not, however, include the provision of any services or advice related to any Federal or State income tax consequences that may arise from the Unwind, including, without limitation, any such consequences that may arise from or as a result of the Investor/CDE Exit, nor will it include any services relating to planning to minimize any such consequences. You are referred to your regular tax and accounting advisors for such services as they will be more familiar with your business and able to provide any such services you require. Notwithstanding the foregoing, I will be happy to work with you and your regular advisors to ensure that they understand the original NMTC Financing, and the steps taken to effect the Unwind. Fees for Legal_ Services. I will charge Sponsor for the Transaction Services at my current hourly rate of $675.00 per hour. Costs and Expenses; In addition to fees for legal services described above, you will be responsible,to pay for disbursements and other expenses incurred in connection with this engagement. These expenses may include filing or recording fees, messenger service, document reproduction (photocopying and digital imprinting), mileage, travel, lodging, and meals, I will bill all costs to you at my actual cost without markup. Mileage will be billed at standard rates determined by the Internal Revenue Service. Any such costs will be itemized on your invoice. Billing and Payment. An invoice for fees and any costs and expenses in connection with this matter will be rendered at closing of the Investor/CDE Exit for all time through the closing date, and if applicable, upon completion of any additional work needed to complete the Unwind after closing of the Investor/CDE Exit. We will impose a 1.0% charge on the last day of each month against all fees and costs that are more than 30 days due. In the unlikely event that we must institute legal proceedings to collect fees and costs owed by you, the prevailing party would be entitled to reasonable attorneys' fees and other costs of collection. Electronic Communications. You should be aware that there are risks associated with sending and storing information electronically. I may communicate with you by email unless you ask me not to. Please note that email can be intercepted and may not be private. Also, email may be Mr. Steve Groom Finance Director City of Federal Way Page 3 April 2, 2024 subject to delays and non -delivery; in appropriate circumstances you should confirm with us that we have received and read your email communication. At your request, I can also establish a process for secure communications, though that would be limited to communications between us and would not protect all communications relating to the Project, most of which will take place via e-mail. I will not be responsible to you for any damage caused to your computer or business from use of electronic communications, including viruses, but cannot guarantee that these will be completely effective. You should take precautions against possible virus infection. I will not be responsible to you for any damage caused to your computer or business from use of electronic communications, including viruses. Responsibilities of Attorney and Client. You are not relying on me for, and I am not providing, any advice regarding business investment or accounting decisions, or any investigation of the character or credit of persons with whom you may be dealing. You understand that I cannot and do not guarantee any outcome for this engagement. While I may, at your request, give you my opinion as to the probability of success or failure of a matter or issue relating to this matter, any such opinions are not to be taken as formal legal opinions or guarantees of any result to be obtained, but simply reflect my best professional judgment based upon the information available to me at the time. You may be asked to read and sign various legal documents in connection with this matter. Please read the documents carefully so that you thoroughly understand them. It is your responsibility to read the documents that you sign. If you have any questions regarding such documents, you should address them to me right away. Accurate Information. The accuracy and completeness of any document or presentation that I prepare is dependent upon the accuracy of information provided by you. To that end, you agree to review all such information for its accuracy and completeness prior to supplying it to me. You further represent that any material, information, reports, and financial statements that you provide to me, whether rendered orally or in writing, will be accurate, and that we may rely upon the truth and accuracy of such information. Record Keeplu . After this engagement has ended, you may request the return of your files. I will retain your files in electronic format for at least three (3) years following the conclusion of this engagement. If you do not request the files in writing before the end of that period, upon the expiration of that period I will have no further obligation to retain the files and may destroy the files without further notice to you. Termination. You have the right to terminate this representation at any time. I have the same right, subject to an obligation to give you reasonable notice to arrange alternative representation. Mr. Steve Groom Finance Director City of Federal Way Page 4 April 2, 2024 Upon termination, you will be responsible for paying for all legal services provided and costs incurred prior to termination as well as any expenses I incur in returning your files to you. This engagement relates solely to the Transaction Services in connection with the Unwind. Unless we specifically agree otherwise in writing, this engagement will automatically terminate on the later of 30 days after closing of the Unwind or completion of any additional work needed to complete the Unwind after the Investor/CDE Exit without further notice or action on the part of either of us. While I am available to answer questions that may arise after such date, unless we agree otherwise doing so will not result in a new engagement and will not constitute the continuation of the engagement described in this letter. Dispute Resolution — Mediation/Arbitration. Although I certainly do not expect that differences will arise between us, I recognize that disagreements can happen. If you become dissatisfied with any aspect of our relationship, I encourage you to bring that to my attention immediately. It is my belief that most problems can be resolved amicably through discussions between us. Through this letter, you and I agree in advance that in the unlikely event that further resolution is required, we agree to resolve any dispute that may arise in the future through the less formal and more expeditious process of mediation, followed, if necessary, by arbitration, with any such mediation or arbitration proceeding to be held in Portland, Oregon, Fort Worth, Texas, or such other location as we may mutually agree. Any such mediation will be conducted by the American Arbitration Association or such other arbitration service as we may mutually agree. In the event mediation is unsuccessful, arbitration will be conducted pursuant to the commercial arbitration rules of the American Arbitration Association. One neutral arbitrator will be selected under such rules and will make a final and binding decision about the outcome of the dispute, which neither of us will be able to appeal. Notwithstanding the foregoing, in the event of any dispute over fees, including for payment by you of unpaid fees, we agree to mediate and, if applicable, arbitrate any such dispute through the lower cost alternative of the Oregon State Bar Fee Dispute Resolution Program. Our agreement to mediate and arbitrate includes all disputes arising out of or related to this engagement. Examples of types of disputes which, although unlikely to arise between us, do occasionally develop between lawyers and their clients, include claims for negligence, breach of contract, breach of fiduciary duty, fraud, unpaid fees and expenses; or claims based on a statute, rule, or regulation. If applicable laws or rules require us to submit to certain mandatory dispute resolution procedures before this private mediation/arbitration clause is triggered, we will engage in those procedures. If any such mandatory dispute resolution procedures have been waived or exhausted, we both agree that the dispute will be submitted for private and confidential mediation and, if necessary, arbitration in accordance with this agreement and each of us bound by the result. It is important for you to note that discovery, standards of evidence and procedural rules differ in arbitration from a civil trial. In an arbitration proceeding discovery is ordinarily Mr. Steve Groom Finance Director City of Federal Way Page 5 April 2, 2024 limited and there are no formal rules of evidence. In addition, to utilize this process, we both hereby agree to forgo the right to a trial by a judge or a jury. If the terms of our representation as described above are acceptable, please date and sign a copy of this letter where indicated below and return it to our office. I appreciate this opportunity to serve you and look forward to working with you. Please feel free to discuss with me any questions you may have regarding the terms of this engagement or any other aspect of our representation. Very truly yours, LAW OFFICE OF ALAN L. PASTERNACK, LLC Alan L. Pasternack I HAVE REVIEWED AND ACCEPTED THE TERMS OF THIS LETTER. THE CITY OF FEDERAL WAY, a Washington municipal corporation By: e Groom. Fim(nce Director Dated: Y