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Home My WebLink About04/02/1990 BAKERSFIELD Kevin McDermott, Chair Patricia DeMond Ken Peterson Staff: John Stinson AGENDA BUDGET AND FINANCE COMMITTEE Monday, April 2, 1990 12:00 p.m.. City Manager's Conference Room 1. Selecti6n of City Auditor (Presentations) 2. Additional Appropriation CDDA Budget 3. Wastewater Treatment Plant #3 Disposal Site Update MARCH 20, 1990 TO: JOHN STINSON, ASSISTANT TO THE CITY MANAGER FROM: GREGORY J. KLIMKO, FINANCE DIRECTOR/~/~--~[-~-~(~F~~ID)-~'''~' SUBJECT: EXTERNAL AUDITOR SELECTION MAR 211990 CITY MAN~G~S OFFICE As directed by the Budget and Finance Committee and other City Council members, the Finance Department has solicited proposals for auditing~ervices for the 1989-90 fiscal year and ensuing four years. We have recei've~-~ive proPos- als and after our review, I recommend any one of the following listed alphabeti- cally. 1. Brown, Waits, and Armstrong 2. Peat Marwick 3. Price Waterhouse The next step in the process could encompass a presentation by each firm to the Budget and Finance Committee. I would suggest possibly a presentation not to exceed ten minutes with a ten minute question and answer period, and hopefully we can complete the interviews in a total of one and one half hours. Would you please inquire of the Budget and Finance Committee their desire regarding this matter? We have not opened the bid amounts at this point in time and would anticipate doing so at the Budget and Finance Committee meeting subse- quent to interviewing the accounting/auditing firms. The selection of an auditing firm really needs to take place by the end of April; so we are running with a rather tight time frame. krc GJK0320902 MEMORANDUM March 16, 1990 TO: DALE HAWLEY ~ FROM: JB31E WAGER SUBJECT: ADDITIONAL APPROPRIATIONS OF $165,000 TO THE CDDA BUDGET (FY 89-90) It has recently been brought to my attention that professional and consulting services have been expended at a rate faster than anticipated. The additional cost can be attributed to legal costs relating to the Rudnick acquisition, the feasibility study for the Convention Center Hotel and special counsel (including bankruptcy proceedings) in defense of the lawsuits related to the Hotel Project. According to our estimates, these added expenditures will result in a $165,000 short-fall by year's end (in this line item) without an additional appropriation at this time. A review of agency accounts indicates a more than adequate availability of funds for this necessary appropriation. The additional funds came from proceeds of $850,000 received during the first quarter of the fiscal year from discounting the note from the sale of the "K" Street Parking Garage. This action has given the Agency up-front cash to help meet its cash shortage. At this time, there is a projected year's end fund balance of $338,000 available which was not appropriated in the 1989-90 CDDA Budget. mm6 OFFICE of THE CITY a TTOHNEY ARTHUR J. SAALFIELD CITY ATTORNEY MUNICIPAL LAW: 1501 TRUXTUN AVENUE . LITIGATION: ALAN DALE DANIEL BAKERSFIELD, CALIFORNIA 93301 DON McGILLIVRA Y Assistant City Attorney (805) 326-3721 Assistant City Attorney ROBERT M. SHERFY LOUISE T. CLOSS Assistant City Attorf~ey Assistant City Attorney MEDEL YIAN R. GRADY LAURA C. MARINO Assistant City Attorney Deputy City Attorney March 30 ~ 1990 WILLIAM H. SLOCUMB INVESTIGATIONS: Assistant City Attorney KRIS BURTON City Attorney Investigator Eldon R. Hugie, Esq. Hugie & Hugie Attorney at Law 5329 office Center Court Bakersfield, CA 93309 RE: Agreement Conditionally Consenting to Assignment of City Agreement No. 85-142 As Amended Dear Mr. Hugie: Since our meeting last Monday with the Council's Budget and Finance Committee, staff has discussed this matter and, met again with the Committee. The result is the attached draft agreement. Please review and contact either me or Dale Hawley, before noon on Monday if possible, if you wish to discuss the agreement. Sincerely, Arthu[[ J. Saalfield City ~c'.~ O~ne ~/' AJS:lg Attachment: Draft Agreement cc: Jo Dale Hawley, City Manager Greg Klimko, Finance Director AGREEMENT NO. CONDITIONAL CONSENT TO ASSIGNMENT OF CITY AGREEMENT NO. 85-142, AS AMENDED .THIS AGREEMENT made and entered into this day of April, 1990, by and between the CITY OF BAKERSFIELD, a municipal corporation, referred to herein as th~ ("City"), and VALLEY COMMUNITIES, INC, a California corporation, herein after referred to as ("VC"). WITNES SETH WHEREAS, VC has entered into an escrow agreement pursuant to which VC will purchase from Tenneco West, Inc. property used as a disposal site for treated wastewater effluent from the City's Wastewater Treatment Plant No. 3,. pursuant to City Agreement No. 85-142 as amended (hereinafter, the "Agreement") WHEREAS, Tenneco West,' Inc. is willing to assign to VC its rights and obligations puYsuant to the Agreement, and VC is willing to accept assignment 'from Tenneco West, Inc. of said rights and obligations; and ~ WHEREAS, pursuant.to the terms of the Agreement, the City's consent to its assignment is required, may not be unreasonably withheld, but the City is expressly authorized to consider factors such as financial capacity of a possible assignee in determining whether to give consent to assignment; and WHEREAS, representatives of the City and VC have met and discussed the assignment and the City has reviewed information submitted by VC as to VC's ability to perform its Obligations under the Agreement; and WHEREAS, in consenting to such assignment, the City would be releasing from all obligation under the Agreement a party (Tenneco West, Inc.) whose financial capacity to perform the Agreement is unquestionable, and would be accepting, in its place, a newly formed corporation with significantly lesser financial capacity; and WHEREAS, representatives of the City and VC have discussed the foregoing and have agreed that the consent to assignment ]nay appropriately be subject to the conditions set forth herein below. THEREFORE, in consideration of the respective and mutual covenants hereinafter contained and made, and subject to all the terms and conditions set forth below, THE PARTIES DO HEREBY AGREE AS FOLLOWS: 1. That the City's consent to assignment of .the agreement to VC .is subject to the condition precedent that Tenneco West, Inc., shall have .assigned its reclamation permit from the State Regional Water Quality Control Board for the disposal Jite to VC. 2. That funds payable pursuant to Paragraph 3 of the Agreement shall be withheld by the City in accordance with the following: a. The City shall withhold sufficient funds each year to pay all real property taxes and assessments against the disposal site property (the 4,700 plus acres subject to the Agreement), such funds to be released to VC upon receipt by the City of written evidence that all such taxes and assessments, including any special district taxes and assessments, have been paid; and b. The City shall withhold the sum of $100,000 each year for five years, to reimburse the City any costs it ]nay incur pursuant to Paragraph 4, below. Such funds shall be deposited by the City in an interest bearing account and, except to the extent drawn against by the City pursuant to Paragraph 4, below, shall be paid over to VC, with accrued interest, commencing five years after the first $100,000 is deposited into such account, at the rate of $100,000 per year, plus 20% of the accrued interest, over the following five years. (See attached Schedule, marked Exhibit "A".) c. In lieu of the withholding provided for in subparagraph b of Paragraph 2., above, VC may elect within thirty (30) days of the date of this agreement, to post and post with the City a performance bond(s) or irrevocable letters of credit, payable upon demand by and to the City. Any such performance bond shall reference this agreement and shall specifically be to pay all capital and operating costs incurred by the City in meeting requirements of any and all regulatory agencies, pursuant to Paragraph 4, below. Such bond or - 2 - amount of $100,000 the first year, increasing by $100,000 increments each year to $500,000 for the fifth year, and decreasing thereafter by $100,000 per year. Should VC not be able to obtain a replacement performance bond for any year after the first year, VC shall deposit with the City all suns that would be held by the City cumulatively through that year, including interest which would have been accrued, assuming an 8% investment rate, pursuant to subparagraph b of Paragraph 2. above, and the City may withhold any funds · otherwise due VC pursuant to Paragraph 3. of the Agreement up to such cumulative amount if such funds are not otherwise deposited with City by VC. Should VC fail to'make all deposits required pursuan't to this subparagraph within ten (10) days of notice from City to do so, such failure shall be deemed a material breach of this agreement. 3. That VC provide written notice to the Director of Public Works of the City within three business days of receipt of any written communication from any state or local regulatory agency of an deficiency in operations of the disposal site, including a copy of such communication. The parties agree that if such notice is not given as Provided herein, it would be extremely difficult if not impossible to ascertain the actual damages sustained by the City, and liquidated damages in the amount of $500.00 per calendar day is a fair and reasonable estimate of such damages. That sum is not to be construed in any sense as a · penalty. 4. That the City may enter upon and operate the disposal site and make necessary improvements, all at VC's expense, should VC's performance or non-performance re the disposal site lead to threatened regulatory agency action which might jeopardize the City's legal ability to discharge treated effluent to that site or to issue building or sewer connection permits for any structure that would be served by the City Wastewater Treatment Plant No. 3; provided, however, that the City shall have first given written notice to VC of the threatened action of the regulatory agency and shall have given VC the opportunity to take action to address such matters to the satisfaction of the regulatory agency; provided, further, that the City may immediately enter and take all necessary corrective action if such action has not been completed by VC within 30 days prior to any deadline set by an such agency. 5. Subject to and in consideration of the foregoing, the City consents to assignment of the Agreement from Tenneco West, Inc., to VC. o0o - 3 - IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed, 'the day and year first-above written. CITY OF BAKERSFIELD By CLARENCE E. MEDDERS Mayor APPROVED AS TO FORM: ARTHUR J. SAALFIELD City Attorney By APPROVED: By ED SCHULZ Public Works Director COUNTERSIGNED: By ~ GREGORY KLIMKO Finance Director VALLEY COMMUNITIES, INC. By Title By AJS/pam Title AGREEMENT\VC-TENNECO.K 3/30/90 - 4 - VALLEY COMMUNITIES, INC. PER PARAGRAPH 2C CONTRACT PER PERFORMANCE YEAR DURING PARAGRAPH 2B BOND OR NO. THE PERIOD CASH BOND LETTER OF CREDIT I 4/4/90 - 4/3/91 $100,000 plus 100% $100,000 Accrued Interest 2 4/4/91 - 4/3/92 $200,000 plus 100% $200,000 Accrued Interest 3 4/4/92 - 4/3/93 $300,000 plus 100% $300,000 ' Accrued Interest 4 4/4/93 - 4/3/94 $400,000 plus 100% $400,000 Accrued Inte?est 5 4/4/94 - 4/3/95 $500,000 plus 100% $~00,000 Accrued Interest 6 4/4/95 - 4/3/96 $400,000 plus 80% $400,000 Accrued Interest 7 4/4/96 - 4/3/97 $300,000 plus 60% $300,000 Accrued Interest 8 4/4/97 - 4/3/98 $200,000 plus 40% $200,000 Accrued Interest 9 4/4/98 - 4/3/99 $100,000 plus 20% $100,000 Accrued Interest NOTE: Amounts are to be increased or decreased effective on the first business day of tile period. EXHIBIT A