HomeMy WebLinkAbout2021-02-8675ORDINANCE 2021-02-8675
AN ORDINANCE AUTHORIZING THE MAYOR TO EXECUTE A
PROFESSIONAL SERVICES AGREEMENT WITH COMMONWEALTH ECONOMICS
PARTNERS, LLC FOR CONSULTING SERVICES RELATED TO THE TAX INCREMENT
FINANCING (TIF) PROGRAM FOR THE PADUCAH RIVERFRONT DEVELOPMENT
PROJECT
WHEREAS, in June of 2018 the Board of Commissioners approved Municipal
Order No. 2111 authorizing a professional services agreement with Commonwealth Economics
in an amount not to exceed $78,000 for consulting services related to the Tax Increment
Financing Program; and
WHEREAS, in December of 2019 the Board of Commissioners approved
Ordinance No. 2019-12-8607 authorizing a professional services agreement with Commonwealth
Economics in an amount of $43,824.80 plus direct expenses in an amount not to exceed $4,000
for consulting services related to the Tax Increment Financing (TIF) Program; and
WHEREAS, the City Manager executed a contract with Commonwealth in
August 2020, authorizing professional services in an amount not to exceed $30,000 for
consultant services related to finalizing the TIF Program; and
WHEREAS, the City of Paducah is now preparing for the final approval by the
Kentucky Economic Development Finance Authority of the Tax Increment Financing Program;
and
WHEREAS, it is now necessary to update the contract with Commonwealth
Economics for additional consulting services; and
WHEREAS, a written determination has been made by the City Manager that this
constitutes a professional services purchase and will be a noncompetitive negotiation purchase,
pursuant to KRS 45A.380(3).
NOW, THEREFORE, BE IT ORDAINED BY BOARD OF COMMISSIONERS
OF THE CITY OF PADUCAH, KENTUCKY:
SECTION 1. That the Mayor is hereby authorized to execute a professional
services agreement with Commonwealth Economics Partners, LLC, for the Tax Increment
Financing (TIF) Program in substantially the form attached hereto and made part hereof (Exhibit
A). This agreement supersedes and replaces the previous agreements with Commonwealth
Economics.
SECTION 2. This expenditure shall be charged to the TIF/Opportunity Zone
Project No. DT0044.
SECTION 3. This ordinance shall be read on two separate days and will become
effective upon summary publication pursuant to KRS Ch e 24.
George Bray, Mayor
ATTEST:
Lindsay Parish,(C ry Clerk
Introduced by the Board of Commissioners, February 9, 2021
Adopted by the Board of Commissioners, February 23, 2021
Recorded Lindsay Parish, City Clerk, February 23, 2021
Published by The Paducah Sun, February 26, 2021
\ord\plan\TIF Consultant Commonwealth Economics 2-2021
EXHIBIT A
Paducah Downtown Riverfront Redevelopment
Mixed -Use TIF Project
Consulting Services
Submitted To:
City of Paducah
Submitted By:
Commonwealth Economics Partners, LLC
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February 2021
Dear Mayor Bray:
Commonwealth Economics Partners, LLC ("Commonwealth Economics' or "CE") is
pleased to provide the City of Paducah ("City" or "Paducah") with a proposal for
consulting services regarding its Downtown Riverfront Mixed -Use Tax Increment
Financing ("TIF") Project ("Project"). CE frequently advises local governments
throughout the TIF approval process and provides comprehensive guidance related to
TIF compliance for approximately 15 different development projects, taking a lead role
throughout the reimbursement process toward recovery of over $1 billion in awarded
incentives.
Commonwealth Economics is a registered Municipal Advisor with the Securities and
Exchange Commission ("SEC') and the Municipal Securities Rulemaking Board ("MSRB").
I. PROPOSED SERVICES
Commonwealth Economics agrees to provide the following consulting services:
A. State TIF Approval Process Services: Commonwealth Economics will continue to
assist the Project team throughout the required meetings and discussions with the
Cabinet for Economic Development ("CED"), Kentucky Economic Development
Finance Authority ("KEDFA"), and the states third -party TIF consultant regarding
the economic and fiscal impacts of the Project, and will continue to work with Project
team members to negotiate and finalize the TIF incentive agreement with KEDFA.
B. TIF Compliance Services: Commonwealth Economics will use reasonable
efforts to assist the City and Project team members with ongoing guidance,
support, training, and representation during the term of the contract. Our
services will be targeted to the tasks which are critical for the Project to
remain in compliance with the TIF agreements in place with KEDFA. These
services include:
• Working with the City and state agencies to accurately set the tax
baseline for the TIF Project. Getting the tax baseline set accurately from
the beginning is a vital step, as the state Department of Revenue
("DOR") and KEDFA will not amend their tax baseline once annual
increment payments have begun. Commonwealth Economics will
take the lead role and assist the City and Project team members,
including:
✓ Documenting the businesses operating within the footprint
during the baseline year and obtaining and compiling TIF
business questionnaires from such businesses. These
questionnaires are required by the state DOR as a condition of
the Tax Incentive Agreement ("TIA") with KEDFA.
✓ Developing an internal estimate of the tax baseline based on the
information collected and other available information.
✓ Completing and submit the required Old Revenues form, with
related TIF questionnaires and tax estimates for each business,
to KEDFA and working with them and DOR to ensure their list
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of businesses included in the baseline calculation match the
City's, and that the state tax baseline calculated by DOR is
reasonable based on the internal estimate.
✓ CE will serve as a point of contact with DOR throughout the
process, or as the City requests.
• Working with the City and Project construction managers to
accurately report the capital investment related to the Project. Semi -
Annual reporting of the capital investment is required by KEDFA
through minimum capital investment and then once annually until the
completion of the Project and is subject to an independent audit at up
to three different milestones. The amount available for reimbursement
to the Project will be dependent upon the extent to which the required
investment threshold is met. This process entails:
✓ Working with construction contractors to educate them on the
information required and establishing a periodic submission
schedule.
✓ Collecting and compiling detailed capital investment
(including public infrastructure) information at periodic
intervals from the Project's construction manager(s).
✓ Completing and submitting the required capital investment
form the Project to KEDFA by January 30ts and July 31St each
year as may be required until the Project is completed.
✓ Working with the City to answer questions during the
independent CPA audits of the Project's capital investment and
public infrastructure reporting.
• Working with the City and Project construction managers to collect
and compile wage withholdings on construction workers within the
footprint, as may be applicable. Once the Project's TIF has been
activated, the wage withholdings on construction workers are eligible
to be recovered as part of the annual increment. This process entails:
✓ Working with construction contractors to educate them on the
information required and establishing a periodic submission
schedule.
✓ Obtaining and compiling TIF business questionnaires from
each contractor and sub -contractor working on the Project
within the footprint.
✓ Collecting and compiling periodic payroll reports or other
detailed payroll information containing wage withholding
information.
✓ Incorporating collected information into the annual request for
increment reimbursement.
• Working with the City to compile, review, and complete the annual
Request for Disbursement. This process entails:
✓. Documenting the businesses operating within the footprint
during the applicable calendar year.
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✓ Obtaining and compiling TIF business questionnaires from
new businesses operating within the footprint (for which TIF
questionnaires have not previously been received).
✓ Developing an internal estimate of the tax revenues for the
applicable year based on the information collected and other
available information.
✓ Completing and submitting the required Request for
Disbursement form to KEDFA and DOR by April 30r'' of the
following year.
✓ Working with DOR to ensure their list of businesses included
in the annual increment calculation matches the City's, and the
increment calculation by DOR is reasonable based on the
internal estimate.
✓ CE will serve as a point of contact with DOR throughout the
process, or as the City requests.
• CE will also provide instructional training and advice to City staff
assigned to work on TIF related matters throughout each of these
processes. CE recommends that each of the processes discussed above
be completed as a joint effort between CE and City staff to use each as
a hands-on training opportunity for City staff during the term of this
contract.
C. TIF Project Scope Analysis: CE will be available to work with the City to
review any changes to the Project scope or Project timing that represents a
significant deviation from the Application and discuss how such changes
might impact the Project's qualifications. This analysis and discussion would
be limited to such evaluation that would not but utilized to determine
funding of certain components or estimation of tax revenues that would be
used to support any debt instruments. The advice provided under this
section would be limited to general TIF Project advice and would not be
deemed to be advice that would be considered financial advisory practices.
Any such advice would need to be qualified under a separate contract
pursuant to a specific issuance of debt or evaluation of the same.
II. FEES AND COMPENSATION
Compensation payable to Commonwealth Economics for all services rendered pursuant to
this Agreement shall be as follows:
A. Section I (A):
Any unpaid balance for services provided under the previous agreement executed on
August 25, 2020 and made effective from July 1, 2020 through February 1, 2021 will be
due upon execution of this Agreement. A flat fee of $4,000.00 per month will be billed
and due each month for services described under Section I (A).
Section I (B) and (C):
Following final approval at completion of Section I(A), a flat fee of $1,750.00 per month
will be billed and due each month until such time as the portion of the Project known as
the "City Block" phase begins construction. At that time, the flat fee will increase to
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$3,500.00 per month, which will be billed and due each month for services described
under Sections I (B) and (C).
B. Commonwealth Economics will provide a travel allowance of two trips per year to
Paducah, KY which may be needed in order to conduct perioding canvassing of the
Development Area or meet with and present to City officials as may be necessary.
CE is also willing to convene via phone or other means of electronic communication
with City officials and area businesses as may be required.
C. Payment shall be due within 15 days pursuant to an invoice presented upon
reaching project milestones or monthly as expenses may occur, and such invoice
shall indicate a description of any out of pocket and third -party expenses incurred
over the prior month.
III. DURATION
A. This Agreement shall be considered a professional service contract, which shall
commence on February 1, 2021, and shall continue until notified of cancellation by
either party, as provided in the following section.
B. Either party may terminate this Agreement by submitting at least thirty (30) days
written notice to the non -terminating party of such intent to terminate. In the event
of termination, payment for services rendered up to and including the date of
termination shall be based upon the work completed at the rates and conditions
identified in this Agreement.
C. Upon notice of intent to terminate, Commonwealth Economics shall immediately
discontinue performance of the service to the extent specified in the notice.
D. Execution of this Agreement shall constitute written notice to proceed
IV. EMPLOYER/EMPLOYEE RELATIONSHIP
It is expressly understood that this Agreement creates NO employer/ employee
relationship, nor does it cause Commonwealth Economics to be an officer or official of the
City. Commonwealth Economics shall at all times be acting as an independent contractor in
all matters related to this Agreement and shall have no authority to act as agent of the City
and shall not hold itself out as such. By executing this Agreement, the parties hereto certify
that its performance will not constitute or establish a violation of any statutory or common
law principle pertaining to conflict of interest, nor will it cause the unlawful benefit or gain
to be derived by either party.
V. CONFIDENTIALITY
Any reports, information, data, etc., provided to, prepared, or assembled by
Commonwealth Economics shall be kept confidential and shall not be made available by
Commonwealth Economics to any individual or organization without the prior written
approval of the City. All documents, including but not limited to; studies, surveys, reports,
date notes, computer files, and files and other documents prepared, developed, or
discovered in connection with providing any services under this Agreement, shall become
the property of the City. The provisions of this section shall survive any termination of this
Agreement.
VI. LIMITATIONS & DISCLAIMER
It is expressly acknowledged that Commonwealth Economics cannot guarantee the
performance or success of any proposed project, bond issue, loan, grant, or the ability to
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obtain funding from any source. Furthermore, Commonwealth Economics cannot
guarantee the availability of funds or a specified rate of return on any investment; the
market value of any security; the future value of any investment or real property; the
performance of any investment manager, advisor, municipal advisor, custodial firm or any
other third -party consultant.
The services provided by Commonwealth Economics are based upon certain projections,
judgments, and assumptions, in certain cases provided by third parties, for which
— Commonwealth Economics cannot guarantee. Circumstances
J1R may occur over the life of the contract and Project that are counter
6� to the assumptions, projections, and judgments and may affect the
realized value from the Project. Further, projections made and used are for multi-year
periods; the results for individual years may vary significantly from forecasted values, and
there is no assurance that the actual impacts and revenues received will be sufficient to
justify the proposed Project or to repay any obligations.
The parties acknowledge that Commonwealth Economics is not acting as a Municipal
Advisor as defined by Section 15B of the Securities and Exchange Commission Act of 1934
to the City of Paducah or McCracken County. Additionally, Commonwealth Economics is
not providing advice or a recommendation with respect to any municipal financial product
or the issuance of municipal securities, including with respect to the structure, timing,
terms, and other similar matters concerning such financial products or issues to the City of
Paducah or McCracken County.
The parties further acknowledge that Commonwealth Economics has not agreed with the
City or County, in this Agreement or any other agreement, verbal or written, to offer or sell
any security, act as an underwriter, placement agent, broker-dealer or market-maker in any
security. The compensation paid to Commonwealth Economics herein is not, and shall not
be construed as, compensation for the offer or sale of any security or for the purpose of
underwriting, making a market or acting as a broker-dealer or placement agent in any
security, or the submission of an application to make a market in any security.
If this proposal meets your approval, please indicate by signing in the appropriate space
below. Should you have any questions, please feel free to contact me at (859) 246-3060.
Sincerely,
John R. Farris
Client
CE
Commonwealth Economics Partners, LLC
John R. Farris
John Farris founded Commonwealth Economics in 2007 and is President and Managing Partner
of the company. He served as an economist at the Center for Economics Research at the Research
Triangle Institute, as well as a senior economics consultant with both the World Bank and the
International Finance Corporation. From 2006 to 2007, Mr. Farris served as Secretary of the
Finance and Administration Cabinet for the Commonwealth of Kentucky. Mr. Farris currently
serves on the Board of Directors of Green Brick Partners (NASDAQ: GRBK) and Kentucky
Technology hic.
Mr. Farris received a full -tuition fellowship to study economics and finance at the Woodrow
Wilson School at Princeton University, where he was awarded a Master's Degree. Before
attending Princeton, Mr. Farris studied economics and philosophy at Centre College, from which
he graduated Phi Beta Kappa. Mr. Farris holds the FINRA/MSRB Series 50 and 54 designations
as Commonwealth Economics Principal Municipal Advisor.
F. Thomas Howard
F. Thomas (Tom) Howard joined Commonwealth Economics in 2013 as a Partner. He retired from
the Commonwealth of Kentucky's Office of Financial Management ("OFM") in the Finance and
Administration Cabinet where he served as the Executive Director since 2005 and previously as
the Deputy Executive Director. In that capacity he oversaw the Commonwealth's $12 billion
investment and appropriation -supported debt programs.
Mr. Howard has a background in banking and investment management. Before joining the
Commonwealth in 1989 as a portfolio manager, Mr. Howard held various positions with First
Security Bank & Trust Company and Eclipse Capital Management, Inc. In addition, Mr. Howard
served three years as a public member and issuer representative of the Municipal Securities
Rulemaking Board, which regulates the activities of banks and broker-dealers under the direction
of the Securities and Exchange Commission. He is also a past chair of the State Debt Management
Network, an affiliate of the National Association of State Treasurers.
During his tenure, Mr. Howard assisted the Commonwealth's legal team with the Department of
Revenue v. Davis Case, which worked its way through the state court system before being heard
by the United States Supreme Court. The question before the court was for providing an income
tax exemption for interest on bonds issued by the state, while denying the exemption to interest
on bonds issued by other states. The Supreme Court ultimately ruled in favor of the
Commonwealth. Additionally, Mr. Howard was very active in planning and financing many of
the state's highest profile projects, such as the Louisville Yum Center Project, the Louisville
Southern Indiana Ohio River Bridges Project, the University of Kentucky Hospital, Louisville
Metro Center City (Omni) Project, the new Lexington Convention Center and Rupp Arena
renovations, the University of Kentucky Winslow Public Private Partnership and most recently
funding of the settlement agreement for the Kentucky Communication Network Authority and
the Kentucky Wired broadband project.
Mr. Howard received his Bachelor's of Business Administration with a concentration in finance
from the University of Kentucky and holds the FINRA/MSRB Series 50 and 54 designations as
Commonwealth Economics Principal Municipal Advisor.
Brett L. Antle, CPA
Brett Antle is a Partner at Commonwealth Economics. Mr. Antle has over 25 years of experience
in financial consulting, government finance and accounting. Since joining Commonwealth
Economics in 2013, Mr. Antle has provided quantitative and financial analysis on several types
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of projects, including sports arenas, infrastructure, and a variety of mixed-use commercial
developments.
Before retiring from the Commonwealth of Kentucky's Finance and Administration Cabinet in
2012, Mr. Antle served in various roles within the Office of State Controller where he managed
the implementation of several financial, reporting and eCommerce systems. He served the last
several years of his career with the Commonwealth as the Deputy Executive Director of the Office
of Financial Management where he managed the Commonwealth's appropriation -supported
debt program and participated in the structuring and issuance of several billion dollars of taxable
and tax-exempt bonds. Mr. Antle has also worked as an independent consultant on a number of
financial system implementations.
Mr. Antle received his Bachelor of Science degree in Accounting from the University of Kentucky.
Mr. Antle is a licensed Certified Public Accountant in Kentucky and holds the FINRA/MSRB
Series 50 Municipal Advisor designation.
Casey R. Bolton
Casey Bolton is a Partner at Commonwealth Economics. Mr. Bolton has specialized in various
forms of economic analysis, including managing a number of feasibility analyses and economic
and fiscal impact studies since joining CE in 2009. Mr. Bolton has conducted feasibility analyses
and impact studies for a wide variety of businesses and development projects and has guided
several of them through the approval process towards receiving millions of dollars in funding.
Mr. Bolton has experience in dealing with various forms of economic incentive programs at both
the State and Federal level, especially Tax Increment Financing, and has been involved in the
analysis and structuring of a variety of public-private partnership project delivery models
throughout the region. Mr. Bolton also has experience working with early stage companies to
develop business plans, scenario -based financial models, pitch books, and offering documents in
order to raise capital.
Mr. Bolton received his Bachelor of Science degree in Financial Economics with a minor in
Political Economy from Centre College in Danville, Kentucky and holds the FINRA/MSRB Series
50 Municipal Advisor designation.
Austin M. Arnold
Austin Arnold is a Senior Associate at Commonwealth Economics. Mr. Arnold has experience
helping projects in the early stages of development assess market feasibility, identify possible tax
incentive programs, and quantify the economic and fiscal impacts of their project. Mr. Arnold has
also worked on multiple incentive program applications across multiple states that have received
successful approval for millions of dollars in funding. Additionally, Mr. Arnold has been
involved in a number of specialized reports for private and public clients in need of unique
solutions for complex projects.
Before joining Commonwealth Economics, Mr. Arnold served the Centre College Athletic
Administration where he assisted the implementation of a new financial database. Additionally,
Mr. Arnold has experience analyzing quantitative and financial data in his role as a Financial
Counselor for 21st Mortgage Corporation.
Mr. Arnold received his Bachelor of Science degree in Economics and Finance from Centre
College in Danville, Kentucky.
Haddon V. Alford
Haddon Alford joined Commonwealth Economics in 2019 as an Associate. Mr. Alford is
responsible for assisting projects with compliance with Local, State and Federal level economic
incentive programs. Mr. Alford also provides various support to projects with regard to their
analysis and structured debt financing.
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Before joining Commonwealth Economics, Mr. Alford worked briefly in congressional politics
and, prior to that, assisted in product and financial feasibility analysis in the steel manufacturing
industry.
Mr. Alford earned a Bachelor of Science degree in Finance and a Bachelor of Science degree in
Marketing from the Darla Moore School of Business at the University of South Carolina with a
minor in Political Science.
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