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HomeMy WebLinkAbout1985-07-02-R RESOLUTION NO. �- A RESOLUTION AUTHORIZING A CONTRACT BETWEEN THE CITY AND RESOURCE MANAGEMENT INTERNATIONAL, INC. FOR FEASIBILITY REVIEW, POWER MARKETING CONSULTATION AND OTHER PURPOSES RELATED TO THE FINANCING OF HYDROELECTRIC GENERATION FACILITIES AT LOCK AND DAM NO. 1 ON THE WHITE RIVER; AND FOR OTHER PURPOSES. WHEREAS, the City of Batesville, Arkansas owns Lock and Dam No. 1 on the White River; and WHEREAS, the City has preliminarily investigated the feasibility of constructing and financing hydroelectric generation facilities in or near Lock and Dam No. 1 (the "Project" ) ; and WHEREAS, application has been made by the City to the Federal Energy Regulatory Commission for a license to construct the Project; and WHEREAS, the chief impediment to the financing of the Project, at this stage, is the burden of financing costs ' of design, feasibility studies, power supply contract negotiations, license application, construction contract negotiations and similar preliminary services, as traditional methods of financing contemplate the issuance of revenue bonds subsequent to the accomplishment of these tasks; and WHEREAS, there has been presented to the City the proposal (the "Proposal" ) of Resource Management International, Inc. ( "RMI" ) for the performance of feasibility review, power marketing consultation and related services, to the end that I financing of the Project may be undertaken and carried out prior to the completion of preliminary services; and WHEREAS, RMI has performed services in connection with a number of successful hydroelectric generation projects and appears clearly to be qualified to perform the services described in the Proposal; and WHEREAS, it is in the interest of development of the Project and in the interest of the City that the Proposal be accepted; • NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Batesville, Arkansas: \r Section 1 . The Proposal is hereby approved, as set forth in the written Proposal to the City of Batesville, Arkansas, for Feasibility Review, Power Marketing and Consultant' s Report presented to the City Council at the meeting at which this Resolution is presented. Section 2 . The Mayor is authorized to enter into such agreements and to execute such writings and take such other action as may be appropriate to engage RMI as set forth in the Proposal, including the compensation set forth therein, and to cause RMI to enter into and perform pursuant to all or any such agreements. The Mayor is authorized to execute such writings and take such action as may be appropriate to carry out the purposes of this Resolution. Section 3 . All resolutions and parts thereof in conflict herewith are hereby repealed to the extent of such conflict. Section 4. Thia Resolution shall be in force upon its passage and approval . APPROVED � 19$5. CITY E BATES I LE, ARKANSAS ATTEST: `,C \ By n ti Mayor City Jerk (SEAL) CERTIFICATE The undersigned, City Clerk of the City of Batesville, Arkansas, hereby certifies that the foregoing pages are a true and perfect copy of Resolution No. 85-7-2, adopted at a special session of the City Council of the City of Batesville, Arkansas, held at the regular meeting place in said City at 5:30 0' clock, p .m. , on the 18th day of July 1985, and that the Resolution is of record in Resolution Record Book No. L_, Page 33 , now in my possession. GIVEN under my hand and seal on this 18th day of July 1985 . City Clerk (SEAL) • AGREEMENT FOR PROFESSIONAL SERVICES FOR FEASIBILITY REVIEW, POWER MARKET ANALYSIS, AND CONSULTANT' S REPORT FOR FINANCING OF THE WHITE RIVER HYDROELECTRIC PROJECT AT LOCK AND DAM NO. 1 This Agreement, dated the �$ day of July, 1985, between the City of Batesville, Arkansas, (hereinafter called City) and Resource Management International, Inc. , a corporation organized under the laws of California (hereinafter called RMI ) , provides that RMI shall provide services for independent feasibility review, power market evaluation and Consultant ' s Report for financing of the White River Lock and Dam No. 1 Hydroelectric Project, which project scope is set out in Federal Energy Regulatory Commission (FERC) License Application 4204 (hereinafter called the Project) , as set forth in the attached Exhibit 1 (Description of Work) in accordance with the following terms and conditions: 1.0 SERVICES RMI shall provide the services described in the attached Exhibit 1 - Description of Work, White River Lock and Dam No. 1 Hydroelectric Project . 2.0 PROSECUTION OF WORK RMI shall provide the services provided hereunder in an efficient, expeditious, and professional manner. It is the intent of the parties that said services be completed to achieve the best possible results at the most economical cost. -1- 3.0 PAYMENT It is understood by the parties that the terms for payment for services under this Agreement are as follows: 3. 1 If bonds or other instruments for financing the Project are sold, the City will, within 10 days of the closing of the sale of bonds or other financing instruments, compensate RMI from the proceeds of such sale as follows: a. The City shall reimburse RMI in an amount equal to RMI ' s documented costs of performing the services provided pursuant to this Agreement in accordance with the rates and charges set forth and presented as Exhibit 2 to this Agreement, (the "Reimbursable Costs" ) in an amount not to exceed $44, 000 ; and b. The City shall, in addition to payment of fees set forth in Subsection (a) , compensate RMI in an amount equal to the "Formula Fee" , as follows: .001 X the first $10 million of the bond, or other instruments sold .0015 X the next $10 million .002 X all amounts of bonds or other instruments sold over $20 million. 3. 2 The hourly rates established in Exhibit 2 shall be adjusted January 1 of each year to reflect the change in RMI ' s rates as officially adopted by RMI ' s board of directors. Any such change in hourly rates shall not change the total dollar limit for compensation set forth in Section 3. 1 . (a) . -2- 3.3 RMI shall be reimbursed for expenses of reproduction, printing, communications, computer services, graphics, and other miscellaneous support services which shall be billed at their cost plus ten percent (10%) expense reimbursement to RMI . Reimbursable Costs will also include reasonable travel expendi- tures, lodging and meals related to work under this contract, within the budget limit, billed at cost. 3.4 Services of all subconsultants shall be billed at cost. (Use of subconsultants shall not increase the $44, 000.00 Reimbursable Costs as set forth in Section 3 . 1. ) 3.5 RMI will present an interim report, as described in Exhibit 1, within approximately 40 days of the t execution of this Agreement. In the event RMI finds fir• the Project and proposed financing infeasible in this interim report and terminates this Agreement pursuant to Section 8. 2, the City shall have no obligation to compensate RMI . In the event the City elects not to proceed with the financing after execution of this Agreement or is precluded from financing the Project due to a voter referendum or other legal action, the City will reimburse RMI for its Reimbursable Costs incurred as of the date of written notice of termination of the Agreement in an amount not to exceed $15,000. 4.0 RIGHT OF CITY TO INSPECT RECORDS OF RMI The City through its authorized employees, representatives, or agents, shall have the right during the term of this Agreement and for three ( 3) years from the date of final payment under this Agreement to audit the books and records -3- " 1 _ of RMI for the purpose of verifying any and all charges made by RMI in connection with RMI ' s compensation pursuant to this Agreement. RMI agrees to maintain sufficient books and records in accordance with generally accepted account- ing principles to establish the correctness of all reimbursable cost charges submitted to the City. 5.0 SUBCONSULTANTS RMI may use approved subconsultants to assist in performing work hereunder; however, RMI shall first obtain written authority from the City to utilize said subconsultants. Any subconsultants will function as an independent contractor and will rely on RMI for all administrative and billing functions . 6.0 INSURANCE RMI shall maintain in effect at its own expense worker ' s compensation, employer ' s liability, One Million and No/100 Dollars ( $1,000, 000.00) comprehensive general liability (bodily injury and property damage) , Five Hundred Thousand and No/100 Dollars ( $500, 000.00) comprehensive automobile liability (bodily injury and property damage) , and One Million and No/100 Dollars ( $1, 000, 000.00) professional liability insurance with respect to employees and vehicles assigned to the prosecution of work under this Agreement. RMI shall obtain and thereafter maintain in effect, if available, such additional insurance as may be requested in writing by the City, the cost of which shall be reimbursed by the City as an out-of-pocket expense. 7.0 EFFECTIVE DATE AND TERM This Agreement shall become effective upon its execution by both parties. RMI shall provide the services described in -4- Exhibit 1 for a term ending 15 days after the sale of bonds, notes, or other instruments of indebtedness subject to the termination provisions of Section 8. This Agreement is based on concluding a bond sale prior to December 31, 1985 . In the event financing occurs after December 31, 1985, the City and RMI shall first establish a mutually acceptable modified limit for the Reimbursable Costs set forth in Section 3 . 1. (a) . 8.0 TERMINATION The City or RMI may terminate the work covered under this Agreement at any time upon seven ( 7 ) days ' prior written notice. 8 . 1 In the event of termination by the City of this Agreement, if within three (3 ) years of such • termination the City finances the Projects or secures funds from another source or from an assignee or transferee of the FERC license for the Project, the City shall , within 60 days of receipt of funds, pay RMI the difference between the $15, 000 payment made pursuant to Section 3 . 5 for its Reimbursable Costs and the total Reimbursable Costs, not to exceed $44, 000. 00, as set forth in Section 3 . 1 . In the event the City secures funds from others in amounts less than its total costs to date, such reimbursement in excess of the $15, 000 payment pursuant to Section 3 . 5 shall be proportional to the ratio of the funds received by the City divided by the total document- able costs incurred by the City for development of the Project to date. 8. 2 RMI may terminate this Agreement at any time RMI , in • its sole opinion, considers the Project or the proposed financing infeasible. If RMI so terminates -5- this Agreement, the City will have no obligation to compensate RMI and RMI will have no obligation to provide the City or others the results of its analysis . 9.0 CITY RESPONSIBILITIES The City agrees to make best efforts to provide the cooperation and assistance of the City and other consultants and advisors to the City as set forth in Section B of Exhibit 1 to this Agreement. 10.0 INDEPENDENT CONTRACTOR It is hereby understood that RMI in performance pursuant to this Agreement is not an employee of the City but is an independent contractor for professional services with full irights to manage its employees subject to the requirements of the law. All persons employed by RMI in connection with this Contract will be employees of RMI and not employees of the City in any respect . 11 .0 AMENDMENTS It is mutually understood and agreed that no alteration or variation of the terms of this Agreement shall be valid unless made in writing and signed by the parties hereto. 12.0 INDEMNIFICATION RMI agrees to defend, indemnify, and hold harmless the City, its officers, agents, and employees from any and all loss, damage, liability, claims, demands, costs, charges, and expense which the City may incur, sustain, or be subjected to on account of RMI having entered into any contract or on account of loss or damage to property or -6- loss of use thereof or for bodily injury to or death of any persons arising out of the actions of RMI , its officers, employees or agents connected with the work to be performed hereunder. Such indemnification shall exclude damages arising from the negligence, errors, or omissions of the City, its officers, agents, employees, or of others. 13.0 NOTICES All formal notices to the parties hereto pertaining to this Agreement shall, unless otherwise requested in writing, be sent to the City addressed as follows: City of Batesville 170 South Fourth Street, Batesville, Arkansas, 72501; and to RMI addressed as follows: Resource Management International, Inc. , One Riverfront Place, Suite 710, North Little Rock, Arkansas, 72114. 14.0 DESIGNATION OF MANAGING AGENT RMI hereby designates the following person to act as managing agent with authority to receive notices and instructions regarding prosecution of the work under this Agreement on behalf of RMI and to deal with the City on behalf of RMI , and any change in the foregoing will be by written notice: Mr. Henry C. Koner Resource Management International, Inc. One Riverfront Place, Suite 710 Twin City Bank Building North Little Rock, Arkansas 72114 The City hereby designates the following person to act as managing agent with authority to receive notices and instructions on behalf of the City, and to deal with RMI on • behalf of the City, and any change in the foregoing will be by written notice: -7- Mayor James Shirrell City of Batesville 170 South Fourth Street Batesville, Arkansas 72501 IN WITNESS WHEREOF, the parties hereto have signed their names the day and year first above written. RESOURCE MANAGEMENT INTERNATIONAL, INC. By: Z""'d Lloyd H. Harvego President CITY OF BATESVILLE By: , ayor Attest: City Clerk Appr v d as to Form: By: City At rney -8- ADDENDUM: 1 TO THE AGREEMENT FOR PROFESSIONAL SERVICES FOR FEASIBILITY REVIEW, POWER MARKET ANALYSIS AND CONSULTANT' S REPORT FOR FINANCING OF THE GTHITE RIVER HYDROELECTRIC PROJECT AT LOCK AND DAY NO . 1 This Addendum 1 to the subject agreement (Agreement) between the City of Batesville (City) and Resource Management International, Inc. (RMI) amends the Agreement as follows : In the event of termination of the Agreement by RYI in accordance with Section 8 . 2 of the Agreement , 1-UTI shall provide the City with a letter report summarizing the analysis and basis for PST' s determination that the Projects or the proposed finan- cing are not , in RIUMI ' s opinion, feasible . Upon submittal of such letter report by RMI, the City shall release RMI from any responsibility for R,1I ' s work on the Project , and neither party shall have any continuing obligation to the other party regarding the Agreement or the work related thereto . This Amendment is approved this ) A4,- day of July, 1985 . City of Batesville E By Mayor Attest : City Clerk Reso Danag em nt International By : s EXHIBIT 1 DESCRIPTION OF WORK WHITE RIVER HYDROELECTRIC PROJECT AT LOCK AND DAM NO. 1 The following describes RMI ' s scope of work to be provided to the City of Batesville in support of securing financing for the White River Hydroelectric Project at Lock and Dam No. 1, the scope of which project is set out in the City' s Federal Energy Regulatory Commission (FERC) License Application for Projects No. 4204. I. Description of Work Scope A. RMI Responsibilities and Tasks TASK 1 - Review Completed Work on Projects 1. 1 Review FERC license application 1. 2 Meet with the Engineers to confirm assumpt- ions and methods used to develop project capacity, energy generation, configuration and costs. TASK 2 - Independent Evaluation 2.1 Confirm, in cooperation with the Engineers, whether the project ' s capacity and turbine configuration is the preferred approach based on recent changes in local power rates (June 7, 1985 rate action by FERC on Arkansas Power and Light Company rates) . -1- 2. 2 Suggest any modifications to capacity or number of turbine/generators, in cooperation with the Engineers, based on results of Task 2.1. 2. 3 Review transmission interconnection plans. TASK 3 - Power Market Analysis 3. 1 Identify prospective power purchasers based on need, activity in securing new resources, proximity, availability of generation resource alternatives and ability to purchase power with use of tax-exempt financing. 3. 2 Compare Project to other available alterna- tives in terms of relative availability �r (development schedules) , cost of power, risk, and environmental acceptability. 3.3 Meet with most promising prospective power purchasers to document level of interest. 3.4 Evaluate wheeling costs and constraints to identify potential impacts on power marketing. TASK 4 - Coordinate Development of Project Financing Plan 4. 1 Working with the City, underwriters, bond counsel, underwriter ' s counsel and the Engineers, develop the schedule and financing • plan and identify the documentation and analysis needed to complete the financing as proposed. -2- 4. 2 Secure from the underwriters the appropriate assumptions for short term and long term interest rates and reinvestment rates for purposes of initial bond issue sizing and cash flow analysis. 4. 3 Work with Project Team to develop cost esti- mates, contingencies, debt service reserve, allowable capitalized interest and other capitalized costs to provide input to bond issue sizing by the underwriters. 4.4 Prepare summary preliminary financial feasi- bility report to estimate bond issue size and available net interest earnings to be avail- able to fund project development activities. TASK 5 - Prepare Independent Consultant ' s Report 5. 1 Prepare draft Independent Consultant ' s Report (Report) for inclusion in the Official State- ment for the sale of bonds. 5 . 2 Review bond indenture and Official Statement for the financing for consistency with Consultant' s Report and power marketing plan. 5. 3 Edit draft Consultant ' s Report to develop final Report for inclusion in Official Statement. TASK 6 - Representation of City in Rating Agency and Pricing Meetings -3- 6. 1 Participation in meetings in New York with bond rating agencies, if such meetings are held. 6.2 Assist the City in review of Official Statement and Bond Indenture for project financing regarding technical (non-legal) matters . TASK 7 - Project Development Plan 7 . 1 Prepare an implementation plan establishing suggested actions required after the sale of bonds to secure a power purchase agreement to support construction activities . Such plan and associated development activities are to be consistent with the funds estimated to be available from the net interest earnings on the bond proceeds. B . Responsibilities and Input of the City and Other Project Team Members Securing the financing for the Project in the manner described above requires a cooperative team effort. The following summarizes the commitment and input required of the City, the Engineers, under- writers, bond counsel and underwriter ' s counsel: 1 . The City must expeditiously make a decision on authorization of financing on the general schedule present in Section C, below, if the financing can be successfully structured to the satisification of bond counsel and the underwriters to meet the objectives of the ( financing approach. -4- �W 2. Background assumptions, analysis methods and calculations by the Engineer to develop the proposed project concepts must be made avail- able and some additional analysis, scheduling, and cost estimating may be required of the Engineers in cooperation with RMI prior to securing financing. 3 . Underwriters must provide, in a timely manner, the applicable interest rates, reinvestment rates, appropriate maturities for the short term securities to be sold, and annual debt service schedules. 4. Bond counsel and underwriter ' s counsel need to provide assistance in establishing the �,. legally allowable costs to be included as project capital costs, legal limitation on capitalized interest, terms of the short term bonds and the flow of funds ( in addition to preparation of the bond indenture and Official Statement) based on the proposed financing approach. 5 . The City will need to provide available descriptions of the City demography, audited financial statements and access to project files as needed to confirm regulatory status of the Projects and supporting data. 6. The City agrees to modify the capacity, plan and configuration of the Projects, if needed, (( to prove the Projects feasible for financing, provided such modification can reasonably be shown to benefit the City. -5- 7. The City will take steps reasonably necessary to maintain its application for license, (or license, if issued during the next four months) , to the FERC for the projects valid and in good standing. C. Schedule for Work In order to expeditiously proceed with Project financing to continue development of the Project, an ambitious schedule will need to be followed. It is proposed that Project financing be arranged for bond sale in October 1985. In order to accomplish this, the following milestone schedule is proposed. Completion Date ° Ratification of RMI Contract 7-18-85 Confirmation of Project Power Output 8-01-85 Interim Feasibility Report 8-26-85 Draft Consultant ' s Report and Official Statement for bond sale 9-09-85 Targeted date for bond sale 10-31-85 -6- Exhibit 2 Resource Management International, Inc. Professional and Paraprofessional Fees Billin Rate 1� Staff Level hour) Managing Executive Consultant 89 Principal Executive Consultant 79 Executive Consultant 69 Principal Consultant 62 Supervising Consultant 57 Senior Professional 52 Associate Professional 48 Junior Professional 44 Research Assistant 33 Office Services 24 1� Fees are adjusted each January 1 to reflect rates established by the Board of Directors. EXCERPTS FROM MINUTES OF MEETING OF THE BATESVILLE CITY COUNCIL HELD July 18 , 1985 The City Council of the City of Batesville, Arkansas, met in special session at its regular meeting place in Batesville, Arkansas, at 5:30 o' clock P .m. , on the 18th day of July 1985 . The following were present: Mayor Shi rrel 1 City Clerk Williams and Aldermen Cargill Marshall Mitchum Mobley Pierce Purtle Ed Williams and Lynn Williams Absent: None The Mayor stated that consideration should be given to a resolution authorizing a contract between the City and Resource Management International, Inc. , for Feasibility Review, power Marketing Consultation and other Purposes related to the financing of hydroelectric generation facilities. This was a matter with which the Council was familiar and the City Clerk read the Resolution in full . Alderman Cargill seconded by Alderman Ed i 11 iams , moved that the Resolution be adopted. The question was put by the Mayor on the adoption of the motion and the roll being called, the following voted aye: Cargill r1itchum Marshall Mobley Pierce Ed Williams Lynn Williams and the following voted nay: Purtle The Mayor thereupon declared the Resolution adopted and signed the Resolution, which was attested by the City Clerk and sealed with the seal of the City. The Resolution was given No. 85-7-2 (Matters not relating to the Resolution are omitted. ) There being no further business, the Council adjourned. Mayor ATTEST: _ City C erk (SEAL) CERTIFICATE The undersigned, City Clerk of Batesville, Arkansas, hereby certifies that the foregoing pages are a true and correct copy of excerpts of the minutes of a meeting of the City Council of Batesville, Arkansas at a special session held at the regular meeting place of the Council in said City at 5: 30 o' clock P .m. , on the 18th day of July , 1985, and the time and place of the meeting was furnished to each person who made a request therefor in accordance with the provisions of Act No. 93 of the Acts of Arkansas of 1967 . City Clerk (SEAL)