Loading...
AG 17-03211 RETURN TO: Robyn Buck EXT: 2527 CITY OF FEDERAL WAY LAW DEPARTMENT ROUTING FORM 1. ORIGINATING DEPT. /DIV: FINANCE 2. ORIGINATING STAFF PERSON: ADE ARIWOOLA 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 X 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: _COMP OF FINANCIAL FORECAST FOR PAEC 6. NAME OF CONTRACTOR: _NOVOGRADAC & COMPANY ADDRESS: _111 SW 5Th AVE STE 1100, PORTLAND, OR 97204 TELEPHONE 503 821 2700 E -MAIL: FAX: SIGNATURE NAME: NICOLO PINOLI TITLE 7. EXHIBITS AND ATTACHMENTS: ❑ SCOPE, WORK OR SERVICES ❑ COMPENSATION ❑ INSURANCE REQUIREMENTS /CERTIFICATE ❑ ALL OTHER REFERENCED EXHIBITS ❑ PROOF OF AUTHORITY TO SIGN ❑ REQUIRED LICENSES X PRIOR CONTRACT /AMENDMENTS 8. TERM: COMMENCEMENT DATE: UPON SIGNATURE COMPLETION DATE: TBD FORECAST PERIOD 9. TOTAL COMPENSATION $_20,000 EACH RUN + $5,000 EACH ADDITIONAL RUN (INCLUDE EXPENSES AND SALES TAX, IF ANY) (IF CALCULATED ON HOURLY LABOR CHARGE - ATTACH SCHEDULES OF EMPLOYEES TITLES AND HOLIDAY RATES) REIMBURSABLE EXPENSE: ❑ YES ❑ NO IF YES, MAXIMUM DOLLAR AMOUNT: $ IS SALES TAX OWED ❑ YES ❑ NO IF YES, $ ❑CITY❑ PURCHASING: PLEASE CHARGE TO: PAID BY: ❑ CONTRACTOR 10. DOCUMENT /CONTRACT REVIEW INITIAL / DATE REVIEWED INITIAL / DATE APPROVED ❑ PROJECT MANAGER X DIRECTOR ❑ RISK MANAGEMENT (IF APPLICABLE) X LAW '),GC 31 6111- 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 ❑ LAW DEPARTMENT ❑ CHIEF OF STAFF SIGNATORY (MAYOR128.AI�t£C� bit) ❑ CITY CLERK ❑ ASSIGNED AG# ❑ SIGNED COPY RETURNED COMMENTS: INITIAL / DATE SIGNED 11/9 ♦ NOVOGRADAC & COMPANY LLP® CERTIFIED PUBLIC ACCOUNTANTS February 24, 2017 Mr. Jim Ferrell, Mayor City of Federal Way 33325 8th Ave S Federal Way, WA 98003 RE: Compilation of a Financial Forecast for Federal Way Performing Arts Center Compilation of Historical Information for Federal Way Performing Arts Center, if applicable Dear Mayor Ferrell: Compilation of a Financial Forecast We are pleased to have the opportunity to provide professional services to the City of Federal Way (the "City ") in connection with your proposed Performing Arts Center (the "Project ") for a to-be- determined period ( "Forecast Period "). This letter is to confirm our understanding of the terms and objectives of our engagement and the nature and limitations of the services we will provide. If the City agrees to the terms set forth below, please sign a copy of this letter (the "Engagement Letter ") at the space provided below and return it to me. We will compile, in accordance with attestation standards established by the American Institute of Certified Public Accountants, from information management provides, a forecasted sources and uses of cash, net operating income, taxable income, summary of tax benefits and estimated tax credits as well as a list of significant assumptions for the Project, its Community Development Entity (CDE) lender(s), and any associated investment fund(s). A compilation is limited to presenting, in the form of a financial forecast, information that is the representation of management, without undertaking to express any assurance on the financial forecast. We will not examine the financial forecast and therefore, will not express any form of assurance on the achievability of the forecast or reasonableness of the underlying assumptions. A compilation of a financial forecast involves assembling the forecast based on management's assumptions and performing certain other procedures with respect to the forecast without evaluating the support for, or expressing an opinion or any other form of assurance on, the assumptions underlying it. If for any reason we are unable to complete our compilation of your financial forecast, we will not issue a report in accordance with this Engagement Letter. A financial forecast presents, to the best of management's knowledge and belief, the Project's expected assets, liabilities, equity, revenue and expenses for the forecast period. It is based on management's assumptions, reflecting conditions it expects to exist and the course of action it expects to take during the forecast period. NOVOGRADAC & COMPANY LLP P 503.821.2700 F 503.821.2701 W www.novoco.com OFFICE 111 SW Fifth Avenue, Suite 1100 Portland, Oregon 97204 Mayor Jim Ferrell February 24, 2017 Page 2 of 8 Management is responsible for representations about its plans and expectations and for disclosure of significant information that might affect the ultimate realization of the forecasted results. There will usually be differences between the forecasted and actual results, because events and circumstances frequently do not occur as expected, and those differences may be material. Our report will contain a statement to that effect. We have no responsibility to update our report for events and circumstances occurring after the date of our report. Our report will include a paragraph that will read as follows: Management has elected to omit the summary of significant accounting policies required by the guidelines for presentation of a forecast established by the American Institute of Certified Public Accountants. If the omitted disclosures were included in the forecast, they might influence the user's conclusions about the Entities' sources and uses of cash and taxable income for the forecast period. Accordingly, this forecast is not designed for those who are not informed about such matters. At the conclusion of the engagement, management agrees to supply us with a representation letter that, among other things, will confirm management's responsibility for the underlying assumptions and appropriateness of the financial forecast and its presentation. The City must notify us in writing of any changes in the intended recipients of the forecast. In order for us to complete the engagement, management must provide assumptions and information that are appropriate for the forecast. If the assumptions provided are inappropriate and have not been revised to our satisfaction, we will be unable to complete the engagement, and accordingly, we will not issue a report on the forecast. It is our understanding that City management has designated qualified individuals with the necessary expertise, preferably within senior management, to be responsible and accountable for overseeing all the services performed as part of this engagement. By your signature below, you acknowledge that management agrees to evaluate the adequacy of, and accept responsibility for, the results of all the services performed as part of this Engagement Letter. In addition, you are responsible for establishing and maintaining internal controls, including monitoring ongoing activities. We will prepare the forecasted sources and uses of cash and forecasted taxable income and summaries of significant assumptions of the Entities for the Forecast Period based on information provided by you. The preparation of the forecast involves the computer processing of, and the mathematical and other clerical functions related to, the presentation of the forecast, which is based on management's assumptions. We, in our sole judgment, reserve the right to refuse to perform any procedures or take any action that could be construed as assuming management responsibilities. If management intends to reproduce and publish the forecast and our report thereon, they must be reproduced in their entirety, and both the first and subsequent corrected drafts of the document containing the forecast and any accompanying material must be submitted to us for approval. Mayor Jim Ferrell February 24, 2017 Page 3 of 8 We will not examine the forecast, and accordingly, will not express an opinion or any other form of assurance on the accompanying schedules, supplemental schedules, or assumptions. Our engagement cannot be relied upon to disclose errors, fraudulent financial reporting, and misappropriation of assets, or illegal acts that may exist. However, we will inform the appropriate levels of City management of any material errors and or any evidence or information that comes to our attention during the performance of this engagement that indicates that fraud may have occurred. We will also report to the appropriate levels of City management any evidence or information that comes to our attention regarding illegal acts that may have occurred, unless they are clearly inconsequential. By your signature below, you acknowledge on behalf of the City that we have no responsibility to identify and communicate deficiencies in the City's internal control as part of this engagement. Compilation and Financial Information Preparation of Historical Information, if applicable We are pleased to confirm our understanding of the terms and objectives of our engagement and the nature and limitation of the services we are to provide for the City for a period to be determined (the "Engagement Period "). If the City agrees to the terms set forth below, please sign a copy of the Engagement Letter at the space provided below and return it to me. We will prepare the sources and uses of cash (the "Financial Information ") of the Project as of the end of the Engagement Period, and perform a compilation engagement with respect to the Financial Information. Management has elected to omit all the disclosures required by the cash basis of accounting. The supplementary information included in the supplemental schedules accompanying the compiled Financial Information will be presented for purposes of additional analysis. We will not compile the supplementary information. We will not express an opinion, a conclusion, or provide any assurance on such supplementary information. Our Responsibilities The objective of our engagement is to: 1) prepare the Financial Information in accordance with the cash basis of accounting based on information provided by you and 2) apply accounting and financial reporting expertise to assist you in the presentation of the Financial Information without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the Financial Information in order for it to be in accordance with the cash basis of accounting. We will conduct our compilation engagement in accordance with the Statements on Standards for Accounting and Review Services (SSARS) promulgated by the Accounting and Review Services Committee of the AICPA and comply with the AICPA' s Code of Professional Conduct, including the ethical principles of integrity, objectivity, professional competence, and due care, when performing the preparation of the Financial Information and performing the compilation engagement. Mayor Jim Ferrell February 24, 2017 Page 4 of 8 We are not required to, and will not, verify the accuracy or completeness of the information you will provide to us for the engagement or otherwise gather evidence for the purpose of expressing an opinion or a conclusion. Accordingly, we will not express an opinion or a conclusion nor provide any assurance on the Financial Information. Our engagement cannot be relied upon to identify or disclose any financial information misstatements, including those caused by fraud or error, or to identify or disclose any wrongdoing within the entity or noncompliance with laws and regulations. However, we will inform the appropriate level of management of any material errors and any evidence or information that comes to our attention during the performance of our procedures that fraud may have occurred. In addition, we will inform you of any evidence or information that comes to our attention during the performance of our compilation procedures regarding any wrongdoing within the entity or noncompliance with laws and regulations that may have occurred, unless they are clearly inconsequential. We have no responsibility to identify and communicate deficiencies or material weaknesses in your internal control as part of this engagement. We, in our sole professional judgment, reserve the right to refuse to perform any procedure or take any action that could be construed as assuming management responsibilities. Your Responsibilities The engagement to be performed is conducted on the basis that you acknowledge and understand that our role is to prepare Financial Information in accordance with the cash basis of accounting and assist you in the presentation of the Financial Information in accordance with the cash basis of accounting. You have the following overall responsibilities that are fundamental to our undertaking the engagement in accordance with SSARS: 1) The selection of the cash basis of accounting as the financial reporting framework to be applied in the preparation of the Financial Information. 2) The preparation and fair presentation of the Financial Information in accordance with the cash basis of accounting and the inclusion of a description of the cash basis of accounting. 3) The design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the Financial Information. 4) The prevention and detection of fraud. 5) To ensure that the City complies with the laws and regulations applicable to their activities. 6) The accuracy and completeness of the records, documents, explanations, and other information, including significant judgments, you provide to us for the engagement. 7) To provide us with- • access to all information that is relevant to the preparation and fair presentation of the Financial Information, such as records, documentation, and other matters. • additional information that we may request from you for the purpose of the compilation engagement. Mayor Jim Ferrell February 24, 2017 Page 5 of 8 • unrestricted access to persons within the City of whom we determine it necessary to make inquiries. 8) To include our compilation report in any document containing the Financial Information that indicates that we have performed a compilation engagement on the Financial Information and, prior to the inclusion of the report, to ask our permission to do so. You are also responsible for all management decisions and responsibilities and for designating an individual with suitable skills, knowledge, and experience to oversee our preparation of your Financial Information. You are responsible for evaluating the adequacy and results of the services performed and accepting responsibility for such services. Our Report As part of our engagement, we will issue a report that will state that we did not audit or review the Financial Information and that, accordingly, we do not express an opinion, a conclusion, nor provide any assurance on them. If, for any reason, we are unable to complete the compilation of your Financial Information, we will not issue a report on such information in accordance with this Engagement Letter. We will provide copies of our compilation report to you and management is responsible for further distribution of the report and the Financial Information. Our compilation engagement ends on delivery of an approved compilation report. This engagement does not include general consulting and advisory services ( "Consulting Services "). The terms and conditions of any Consulting Services or follow -up must be mutually agreed upon in a separate written engagement letter. Expected Fees Our fee for the initial run of the financial forecast will be $20,000, and for each additional run of the forecast, the cost will be $5,000. Our fee is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the engagement. If additional time and effort is necessary to obtain documentation required by applicable professional standards ( "Unanticipated Services "), we will notify you with a revised fee quote and not perform additional work until you have given us your authorization to proceed. You agree and acknowledge that it may be necessary for us to disengage prior to completion of this engagement if we cannot satisfy our professional standards without performing Unanticipated Services that you decline to approve. You will also be billed for travel and other out -of- pocket costs such as report production, typing, postage, etc. If we are compelled to respond to a subpoena or other enforceable order for document production, deposition or other testimony related to this engagement, you agree to pay us for all time and out -of- pocket costs we incur in complying with such requirements. The preceding sentence shall apply regardless of how much time has elapsed since we completed our engagement, and regardless of whether you are the party compelling us to produce documents or appear for testimony. Mayor Jim Ferrell February 24, 2017 Page 6 of 8 Our invoices for these fees will be rendered each month as work progresses and are payable on presentation and must be paid before our work product is delivered. After 30 days, a late charge will be imposed on unpaid fees at a rate of 10% per annum, assessed monthly based on 0.83% of the account's balance of past due invoices. Work may be suspended if your account is not paid and will not be resumed until your account is paid in full. If we elect to terminate our services for nonpayment, nonapproval of Unanticipated Services or because our professional standards require disengagement, our engagement will be deemed to have been completed upon notification of termination, even if we have not completed our report. You will be obligated to compensate us for all time expended, and to reimburse us for all out -of- pocket expenditures through the date of termination. Limitation on Damages Unless otherwise prohibited by law or regulation, the maximum amount of damages you may receive as a result of any determination that some or all of the services we performed under this and/or other mutual engagement letters between us and you were deficient, or for breach of contract, nonfeasance or negligence, shall be three times the fees paid to us for the disputed services. Similarly, the maximum amount of damages you can receive related to services you assert or believe we were required to perform, but which we did not perform, shall be three times the fees paid to us for said non - performed services. You and we agree that, because of the difficulty of determining and/or quantifying damages for breach of this Engagement Letter or for our negligence, said amount shall constitute liquidated damages for any claims you may assert arising from or related to this Engagement Letter. In no event shall we be liable for the consequential, special, incidental, or punitive loss, damage or expense caused to you or to any third party (including without limitation, lost profits, opportunity costs, etc.). Limitations Period on Actions To the fullest extent permitted by law, no controversy, claim, suit or action, regardless of nature or form, relating to or arising out of this engagement, may be brought by or on behalf of the City and/or its Board of Managers, Board of Directors, Board committees, similar governing bodies, members, partners, principals, stockholders, principals, employees, agents, affiliates, and/or subsidiaries, against Novogradac & Company LLP, or its members, partners, principals, managers, employees, agents, affiliates, or subsidiaries, more than one (1) year after the cause of action accrues. The foregoing period of limitation shall not be subject to tolling of any kind. Nothing contained within this Engagement Letter shall operate to extend, lengthen, or toll any applicable statutory limitations period of less than one year or any accrual point for any cause of action provided by law. Confidentiality and Working Paper Ownership The working papers prepared in conjunction with our compilation are the property of our firm, constitute confidential information and will be retained by us in accordance with our firm's policies and procedures in accordance with applicable regulatory requirements. The City must maintain its own copy of documents provided to, or received from, us during the course of this engagement. The preceding sentence shall apply even if we have established a "client portal" within which you have the ability to upload, download or reference certain documents related to the services we have provided to you. Please note that documents on our client portal are generally purged automatically within a year of being posted to the portal, although certain archival copies of final deliverables may be retained for longer periods of time at our sole discretion. Mayor Jim Ferrell February 24, 2017 Page 7 of 8 Before providing us with any documents that contain credit card or individuals' social security numbers, please first mask or redact such numbers. If you choose to send any type of confidential information to us electronically, we strongly recommend that you use the secure transmission and/or client portal features of our ShareFile system, or you may use your own encrypted email service if you prefer. Our ShareFile service can be found at https: / /novoco.sharefile.com/. The signature block of our emails contains a link that will allow you to easily send documents to one of our personnel. If you choose to electronically send us confidential information by any unsecure means, including without limitation unencrypted email, you agree to bear all risks and damages that may result if the communication is intercepted. Third Party and Internal Use of Data and Reports Any facsimile, Internet or other e-mail communication is tentative and preliminary and any work product is not final until received in signed form. As such, you agree not to act upon any information received in a facsimile, Internet or other e-mail communication until, and unless, you receive such information in signed form. You agree to obtain our written permission before providing copies of the work product from this engagement to third parties. If you fail to obtain such permission from us, you agree to reimburse us for any costs and expenses we may incur as a result of your provision of the work product to one or more third parties. Aggregated and otherwise anonymous financial data are used by accounting professionals for a variety of benchmarking, valuation and other research- related purposes. For example, benchmark data for similar entities are used in performing analytical review procedures to help identify potential anomalies in clients' financial statements. We will not disclose owner and/or investor identities. By signing this Engagement Letter, you consent to the non - identifiable use of your financial data. If you do not wish to have your data used in this manner, please contact us rather than sign this Engagement Letter. Governing Law, Venue and Jurisdiction All matters related to, concerning, or arising out of the professional relationship between the parties, or arising out of this Engagement Letter or the services provided or to be provided hereunder, shall be governed by, and construed in accordance with, the laws of the State of Washington, with respect to all procedural and substantive issues, without giving effect to Washington's conflict of laws rules. Any claim or action related to, concerning, or arising out of the aforementioned matters shall be brought and maintained exclusively with the United States District Court, Western District of Washington ( "WDWA "), located in Seattle, Washington. For any dispute or proceeding for which WDWA denies jurisdiction, such matters shall instead be brought before the King County Superior Court located in the State of Washington. The parties expressly and irrevocably submit to the jurisdiction of the aforementioned courts for the purpose of any such claim or action and expressly and irrevocably waive, to the fullest extent permitted by law, any rights, defenses, and objections which it may have or hereafter may have to the laying of venue in the aforementioned courts, including but not limited to any claim that such forum is inconvenient. Severability Should any term or provision of this Engagement Letter, or part thereof, be declared or be determined by any court of competent jurisdiction to be illegal, invalid or unenforceable, the legality, validity and enforceability of the remaining parts, terms and provisions shall not be affected thereby and said illegal, unenforceable or invalid part, term or provision shall be deemed modified to the extent necessary to render it enforceable, preserving to the fullest extent permissible the intent of the parties set forth in this Engagement Letter. Mayor Jim Ferrell February 24, 2017 Page 8 of 8 Some of the services described in this Engagement Letter may be provided by partners of an affiliate controlled by Novogradac & Company LLP. We believe this Engagement Letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this Engagement Letter, please sign the enclosed copy and return it to us so that we may begin work on this engagement. If we do not receive this executed Engagement Letter (and any required retainer) in our office within thirty days of the date of this Engagement Letter, our offer to perform these professional services is automatically withdrawn. If we do agree in writing to extend the timeframe for execution of this Engagement Letter, please be aware that late initiation of the engagement will affect the timeframe for delivery of draft and final work products. We appreciate the opportunity to be of service to you. Very truly yours, NOVOGRADAC & COMPANY LLP by: icolo Pinoli ( RESPONSE: This Engagement Letter correctly sets forth our understanding for the services to be provided, and I am fully authorized to execute this Engagement Letter and bind the City: Accepted by: City of Federal Way By: Date: