RDAP-2009-02 - 2009-05-18RESOLUTION NO. RDAP-2009-02
A RESOLUTION OF THE DEVELOPMENT AUTHORITY OF PEARLAND
(DAP), TEXAS, APPROVING A CONTRACT WITH ARBITRAGE
COMPLIANCE SPECIALISTS, INC. FOR ARBITRAGE COMPLIANCE
SERVICES
BE IT RESOLVED BY DAP BOARD OF DIRECTORS:
Section 1. That contract letter for arbitrage compliance services, a copy of
which is attached hereto as Exhibit "A" and made a part hereof for all purposes,
is hereby authorized and approved.
Section 2. That the Chairman is hereby authorized to execute and the Secretary
to attest a contract letter for arbitrage compliance services.
PASSED, APPROVED, AND ADOPTED this 18t" day of May, A.D. 2009.
Tom Reid
DAP Chairman
ATTEST:
~~ /~~-
Ed Baker
DAP Secretary
Exhibit "A"
Resolution No. RDAP-2009-02
May 1, 2009
Ms. Claire Bogard, Director of Finance
City of Pearland ("City")
3519 Liberty Drive
Pearland, Texas 7758]
On Behalf of
Development Authority of Pearland ("Authority")
ARBITRAGE COMPLIANCE SPECIALISTS, INC.. ,
COMPREHENSIVE CONTRACT LETTER FOR ARBITRAGE COMPLIANCE SERVICES
FOR THE DEVELOPMENT AUTHORITY OF PEARLAND TAX-F,XEMPT BOND ISSUES
THROUGH THE PE{Z101> ENDING Fl'E')/3U/Ill
Arbitrage Compliance Specialists, Inc. ("ACS") is proposing a comprehensive contract ("Contract") to complete
and bring to current status all rebate reports through the FYE 9/30/10, pertaining to the required rebate to the United
States "Treasury, Internal Revenue Service ("IRS") for all tax-exempt debt issues ("Bonds") of the Authority listed in
Exhibit A of this Contract. ACS has offered the Authority volume discounted fees of X1,250 for annual Rebate
Reports from our standard fee of $1,500.
Based on ACS's prior experience with arbitrage rebate computations for the Authority's Bonds, ACS's review of
various Authority accounting information and, ACS's experience with similar engagements of this nature and scope, we
have set forth the total contractual cost to complete rebate reports as defined in Exhibit A of this Contract to be $6,250
with a contingency of $625, for a Contract total not to exceed $6,875. The fees due for arbitrage compliance services
will be billed by ACS, based on ACS's Fees, at the time of the Report delivery to the Authority. All invoices will be
paid to ACS by the Authority as of the payable date of the invoice.
The scope of this Contract would cover the services, as stipulated in Exhibit A for arbitrage compliance reports.
ACS has provided fora $625 contingency budget in this Contract if the scope of the Contract needs to expand for any
services after discovery and will be based on the Fee Schedule defined in Exhibit B. ACS is the prime manager and
Contractor of this Contract and does not plan to retain or manage any subcontractors to assist with this Contract.
HEADauARTERS: 7400 East Orchard Road, Suite 270 • Greenwood Village • Colorado • 80111
Phone: (303) 756-5100 I (800) 672-9993 • Fax: (303) 756-0901 1 (800) 756-6505 • E-Mail: Arbitrage@RebateByACS.com
LOCATIONS NATIONWIDE: La Jolla, CA I Greenwood Village, CO 1 Orlando, FL I Boise, ID I Las Vegas, NV
Durham, NC 1 Portland, OR I Nashville, TN I Houston, TX I Salt Lake City, UT I Seattle, WA
We appreciate the opportunity to present this Contract to the Authority. If we may be of further assistance, or if
you or any of the involved Authority personnel have any questions, please do not hesitate to call us at (800) 672-9993.
Sincerely,
Arbitrage Comp ~ nce Specialists, Inc.
Doug Pahnke, Director, Vice President
Please acknowledge acceptance of this Contract by executing and returning one copy of this letter to Arbitrage
Compliance Specialists, Inc. along with any other purchase orders or required paperwork deemed necessary by the
Authority to Arbitrage Compliance Specialists, Inc.
Accepte y - Si re Date
Accepted by -Print Name Title
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May 1, 2009
Ms. Claire Bogard, Director of Finance
City of Pearland ("City")
3519 Liberty Drive
Pearland, Texas 77581
On Behalf of
Development Authority of Pearland ("Authority")
EXHIBIT B
FEE SCHEDULE
FOR ARBITRAGE COMPLIANCE SERVICES
FOR THE DEVELOPMENT AUTHORITY OF PEARLAND
SERVICE FEE SCHEDULE:
REBATE REPORT FEES (PER YEAR):
FIXED RATE BONDS:
FIRST YEAR OF REPORT COMPUTATION PERIOD OF UP TO ONE YEAR)
EXTENSION FEE REPORTS IN EXCESS OF ONE YEAR, PARTIAL YEARS ARE PRORATED)
$1,250
$600
VARIABLE RATE BONDS:
FIRST YEAR OF REPORT COMPUTATION PERIOD OF UP TO ONE YEAR)
EXTENSION FEE REPORTS IN EXCESS OF ONE YEAR, PARTIAL YEARS ARE PRORATED)
$1,850
$700
REBATE SUPPLEMENTAL FEES:
BOND YEAR SLICING PER YEAR $1,000
PREPARATION OF FORM 8038-T AND IRS FILING INSTRUCTIONS ON-TIME $295
LATE $395
REFUNDING BONDS WITH TRANSFERRED PROCEEDS ALLOCATIONS HOURLY;
RATE $150
ALLOCATION~REVIEW~ VERIFICATION OF COMMINGLED FUNDS HOURLY;
RATE $150
OTHER CONSULTING~IRS AUDIT ASSISTANCE~DATA GATHERING HOURLY;
RATE $175
YIELD RESTRICTION CALCULATIONS:
YIELD RESTRICTION CALCULATIONS REPORT FEE FOR 1ST YEAR PERIOD $1,000
REPORTS COVERING COMPUTATION PERIOD IN EXCESS OF 1 YEAR FOR
EACH ADDITIONAL PARTIAL OR FULL YEAR $875
PENALTY/SPENDING EXCEPTION REPORT FEES:
SPENDING EXCEPTION CALCULATIONS -PER SEMI-ANNUAL SPENDING PERIOD $1,250
HEaoquAIITERS: 7400 East Orchard Road, Suite 270 • Greenwood Village • Colorado • 80111
Phone: (303) 756-5100 1 (800) 672-9993 • Fax: (303) 756-0901 1 (800) 756-6505 • E-Mail: Arbitrage@RebateByACS.com
LOCATIONS NATIONWIDE: La Jolla, CA 1 Greenwood Village, CO I Orlando, FL I Boise, ID 1 Las Vegas, NV
Durham, NC I Portland, OR I Nashville, TN I Houston, TX I Salt Lake City, UT I Seattle, WA
ACS's fees are based on the following five categories:
Rebate Report Fees -There are different report fees for the various types of bond issues that reflects the necessary time and effort
required for legal and technical analysis, due diligence and transactional reporting.
Rebate Supplemental Fees -Optional fees may apply in more complex rebate areas dealing with Transferred Proceeds arising in
connection with refunding bonds or commingled investment to be evaluated.
Spending Exception Report Fee -Fee for calculating ACT' (the amount to be spent semi-annually), determining expenditures and
retainage and any penalties owed. These fees are in lieu of rebate fees.
"THE IRS ALLOWS A CREDIr OF UP TO $5,000 PER 5-YEAR FILING. ACS'S FEES ARE LESS THAN THE CREDIT YOU RECEIVE FROM THE IRS.
Note: ACS's fees should be paid from bond proceeds. ACS's fees stated above include all normal business expenses such as
faxes, copies, regular U.S. mail postage, and telephone access via ACS's toll free telephone number. FedEx, when needed, is
billed to the City at cost. Reimbursement for travel expenses, although not expected, will be limited to pre-approved customary
travel and lodging rates.
2
AGENDA REQUEST
DEVELOPMENT AUTHORITY OF PEARLAND
PEARLAND, TEXAS
AGENDA OF: 05/18/09 ITEM NO.: RDAP-2009-02
DATE SUBMITTED: 05/07/09 REPRESENTING: City of Pearland
PREPARED BY: Claire Bogard PRESENTOR: Claire Bogard
SUBJECT: Contract for Annual Arbitrage Calculations
EXHIBITS: Resolution No. RDAP-2009-02; (Exhibit A to Resolution No. RDAP-
2009-02, Contract Letter).
EXPENDITURE REQUIRED: $6,875.00
PROJECT: N/A
EXECUTIVE SUMMARY
The Development Authority has issued tax-exempt bonds and is planning on issuing
additional tax-exempt bonds. IRS regulations state that an entity cannot earn more interest
on the bonds than it is paying. If an entity does, this is called arbitrage, and an entity is
required to report and pay the gain to the IRS. Calculations are required every 5 and 10
years until the construction funds are depleted and until the there is no outstanding debt.
It was staffs recommendation, with board consensus, to track and calculate arbitrage
annually versus every 5 years. The calculations are current, the Development Authority will
know of potential liabilities, and information and data required to be sent to the consultant is
easily accessible annually versus re-creating/gathering the data every 5 years. Calculations
to -date show no tax liability on any bond issue.
Attached is the annual contract with Arbitrage Compliance Specialists, Inc. to bring current
all rebate reports through 9/30/10 or applicable filing dates through 9/30/10 for all tax-
exempt debt issues of the Authority. The total amount of the contract, not to exceed, is
$6,875.
RECOMMENDED ACTION
Consideration and approval of contract with Arbitrage Compliance Specialists, Inc. for
fiscal year 2010 arbitrage calculations in the amount not to exceed $6,875.
Revised 2007-01-09
May 1, 2009
Ms. Claire Bogard, Director of Finance
City of Pearland ("City")
3519 Liberty Drive
Pearland, Texas 77581
On Behalf of
Development Authority of Pearland ("Authority")
COMPREHENSIVE CONTRACT LETTER FOR ARBITRAGE COMPLIANCE SERVICES
FOR THE DEVELOPMENT AUTHORITY OF PEARLAND TAX-EXEMPT BOND ISSUES
THROUGH THE PERIOD ENDING FYE 9/30/10
Arbitrage Compliance Specialists, Inc. ("ACS") is proposing a comprehensive contract ("Contract") to complete
and bring to current status all rebate reports through the FYE 9/30/10, pertaining to the required rebate to the United
States Treasury, Internal Revenue Service ("IRS") for all tax-exempt debt issues ("Bonds") of the Authority listed in
Exhibit A of this Contract. ACS has offered the Authority volume discounted fees of $1,250 for annual Rebate
Reports from our standard fee of $1,500.
Based on ACS's prior experience with arbitrage rebate computations for the Authority's Bonds, RCS's review of
various Authority accounting information and, ACS's experience with similar engagements of this nature and scope, we
have set forth the total contractual cost to complete rebate reports as defined in Exhibit A of this Contract to be $6,250
with a contingency of $625, for a Contract total not to exceed $6,875. The fees due for arbitrage compliance services
will be billed by ACS, based on ACS's Fees, at the time of the Report delivery to the Authority. All invoices will be
paid to ACS by the Authority as of the payable date of the invoice.
The scope of this Contract would cover the services, as stipulated in Exhibit A for arbitrage compliance reports.
ACS has provided for a $625 contingency budget in this Contract if the scope of the Contract needs to expand for any
services after discovery and will be based on the Fee Schedule defined in Exhibit B. ACS is the prime manager and
Contractor of this Contract and does not plan to retain or manage any subcontractors to assist with this Contract.
We appreciate the opportunity to present this Contract to the Authority. If we may be of further assistance, or if
you or any of the involved Authority personnel have any questions, please do not hesitate to call us at (800) 672-9993.
Sincerely,
Arbitrage Compliance Specialists, Inc.
Doug Pahnke, Director, Vice President
Please acknowledge acceptance of this Contract by executing and returning one copy of this letter to Arbitrage
Compliance Specialists, Inc. along with any other purchase orders or required paperwork deemed necessary by the
Authority to Arbitrage Compliance Specialists, Inc.
Accepted by — Signature
Accepted by —Print Name
Organization
Date
Title
-2-
Arbitrage Compliance Specialists, Inc.
Page I
EXHIBIT
DEVELOPMENT AUTHORITY OF PEARLAND
ARBITRAGE AND YIELD RESTRICTION REPORT FEES
NEXT
FILING DATE
(R=REBATE)
(YR--YIELD REST)
ISSUE
DELIVERY 4
.5TH EAR
(11 0TH=1 OTH YEAR)
FY
CNTRL.
8
BOND ISSUE
AMOUNT
DATE
(F=FINAL)
1011108 - 9130109
22
Tax Increment Contract Revenue Bonds, Series 2004
$13.995M
12/15/04
12115108 - 12/15/09 6TH (R)
$1,250
27
Tax Increment Contract Revenue Bonds, Series 2005
$9.775M
11122105
11 IM08 - 11122109 (R)
$1.250
32
Tax Increment Contract Revenue Bonds, Series 2006
$9.97M
i Or27106
^ 10127108 - 10127109 (R)
—Increment Contract Revenue Bonds, Series 2007
$15.95M
10/25/07
10/25/08 - 10/25/09 (R)
$1,250
59
ISeries 200'6
5/1/09
511166.511110 (R)
$1,250
'SUBTOTAL
$6.250
ESTIMATE OF HOURLY UNCOMMINGLING FEES + CONTINGENCIES (10%)
-7-
5
75TAL
Ms. Claire Bogard, Director of Finance
City of Pearland ("City")
3519 Liberty Drive
Pearland, Texas 77581
On Behalf of
Development Authority of Pearland ("Authority")
May 1, 2009
EXHIBIT B
RESCHEDULE
FOR ARBITRAGE COMPLIANCE SERVICES
FOR THE DEVELOPMENT AUTHORITY OF PEARLAND
SERVICE
FEE SCHEDULE:
REBATE REPORT FEES (PER YEAR):
FIXED RATE BONDS:
FIRST YEAR OF REPORT (COMPUTATION PERIOD OF UP TO ONE YEAR)
$1,250
EXTENSION FEE EPORT5IN EXCESS OF ONE YEAR, PARTIAL YEARS ARE PRORATED)
$600
VARIABLE RATE BONDS:
FIRST YEAR OF REPORT (COMPUTATION PERIOD OF UP TO ONE YEAR)
$1,850
EXTENSION FEE (REPORTS IN EXCESS OF ONE YEAR, PARTIAL YEARS ARE PRORATED)
$700
REBATE SUPPLEMENTAL FEES:
BOND YEAR SLICING PER YEAR
$1,000
PREPARATION OF FORM 8038-T AND IRS FILING INSTRUCTIONS
ON -TIME $295
LATE $395
REFUNDING BONDS wr I TRANSFERRED PROCEEDS ALLOCATIONS
HOURLY;
RATE $150
ALLOCATION/REVIEW/VERIFICATION OF COMMINGLED FUNDS
HOURLY;
RATE $150
OTHER CONSULTING/IRS AUDIT ASSISTANCE/DATA GATHERING
HOURLY;
RATE $175
YIELD RESTRICTION CALCULATIONS:
YIELD RESTRICTION CALCULATIONS REPORT FEE FOR 1ST YEAR PERIOD
$1,000
REPORTS COVERING COMPUTATION PERIOD IN EXCESS OF 1 YEAR FOR
$875
EACH ADDITIONAL PARTIAL OR FULL YEAR
PENALTY/SPENDING EXCEPTION REPORT FEES:
SPENDING EXCEPTION CALCULATIONS - PER SEMI-ANNUAL SPENDING PERIOD $1,250
ACS's fees are based on the following five categories:
Rebate Report Fees - There are different report fees for the various types of bond issues that reflects the necessary time and effort
required for legal and technical analysis, due diligence and transactional reporting.
Rebate Supplemental Fees - OptionaI fees may apply in more complex rebate areas dealing with Transferred Proceeds arising in
connection with refunding bonds or commingled investment to be evaluated.
Spending Exception Report Fee - Fee for calculating ACP (the amount to be spent semi-annually), determining expenditures and
retainage and any penalties owed. These fees are in lieu of rebate fees.
THE IRS ALLOWS A CREDIT OF UP To $5,000 PER 5-YEAR FILING. ACS's FEES ARE LESS THAN THE CREDIT YOU RECEIVE FROM THE IRS.
Note: ACS's fees should be paid from bond proceeds. ACS's fees stated above include all normal business expenses such as
faxes, copies, regular U.S. mail postage, and telephone access via ACS's toll free telephone number. FedEx, when needed, is
billed to the City at cost. Reimbursement for travel expenses, although not expected, will be limited to pre -approved customary
travel and lodging rates.