1 FIRST AMENDMENT TO THE FIRST AMENDED AND RESTATED PROFESSIONAL CONSULTANT SERVICES AGREEMENTPFM FINANCIAL ADVISORS LLCMunicipal Financial Advisory Services Panel (RFP No. 2261) THIS FIRST AMENDMENT TO THE FIRST AMENDED AND RESTATED PROFESSIONAL CONSULTANT SERVICES AGREEMENT (“First Amendment”) is made and entered into this ________ day of ________________, 2024, by and between the CITY OF RIVERSIDE, a California charter city and municipal corporation (“City”), and PFM ADVISORS LLC, a Delaware limited liability company authorized to do business in California (“Consultant”), with respect to the following facts: RECITALSWHEREAS, on or about July 26, 2023, City and Consultant entered into that certain Master Professional Consultant Services Agreement (“Master Agreement”); and WHEREAS, on or about April 26, 2024, City and Consultant amended and restated the Master Professional Consultant Services Agreement as a Professional Consultant Services Agreement, and entered into that certain First Amended and Restated Professional Consultant Services Agreement (“Agreement”); and WHEREAS, the City and Consultant desire for the Consultant to provide the City with financial advisory services related to the Inflation Reduction Act (IRA); and WHEREAS, the City and Consultant desire to increase the total compensation amount of the Agreement by Seventy-Five Thousand Dollars ($75,000.00), thereby raising the total sum of compensation allowed per the Agreement to an amount not to exceed One Hundred Sevent-Five Thousand Dollars ($175,000.00). NOW, THEREFORE, in consideration of the foregoing recitals, which are incorporated herein by this reference, City and Consultant agree as follows: 1. Section 1, “Scope of Services”, is hereby amended to incorporate that City agreesto retain and does hereby retain Consultant and Consultant agrees to provide the services more particularly described in Exhibit “A-1,” “Scope of Services (IRA)”, attached hereto and incorporated herein by reference. 2. Section 3, “Compensation/Payment”, is hereby amended to increase the totalcompensation amount by Seventy-Five Thousand Dollars ($75,000.00), thereby raising the total sum of compensation under the Agreement to an amount not to exceed One Hundred Seventy-Five Thousand Dollars ($175,000.00); and 2 3. Section 3, “Compensation/Payment”, is hereby amended to incorporate the feeschedule set forth in Exhibit “B-1”, “Compensation (IRA)”, for work performed as per the terms of Exhibit “A-1”,” Scope of Services (IRA)”; and 4. Section 35, “Exhibits”, is hereby amended to incorporate the following exhibits tothe Agreement by reference:Exhibit “A-1” - Scope of Services (IRA) Exhibit “B-1” - Compensation (IRA) All other terms and conditions of the Agreement between the parties which are not inconsistent with the terms of this First Amendment, shall remain in full force and effect as if fully set forth herein. [SIGNATURES ON NEXT PAGE.] 3 IN WITNESS WHEREOF, City and Consultant have caused this First Amendment to the First Amended and Restated Professional Consultant Services Agreement to be duly executed on the day and year first above written. CITY OF RIVERSIDE, a California charter city and municipal corporation By: ______________________________ Mike FutrellCity ManagerAttest: ___________________________ Donesia GauseCity ClerkPFM FINANCIAL ADVISORS LLC,a Delaware limited liability company authorized to do business in California By: ______________________________ ______________________________ Printed Name ______________________________ TitleCertified as to Availability of Funds:By:_______________________________ Chief Financial OfficerAPPROVED AS TO FORM: By: ______________________________ Sean B. Murphy Deputy City AttorneyandBy: ______________________________ ______________________________ Printed Name ______________________________ Title23-0332.4 SBM/jv 07/05/2024\\Rc-citylaw\cycom\WPDOCS\D005\P041\00849629.DOC
EXHIBIT “A-1” SCOPE OF SERVICES (IRA)
June 6, 2024
1 Edward Enriquez, Chief Financial Officer City of Riverside 3900 Main Street, 6th Floor Riverside, CA 92522 Dear Edward: 1820 East Ray RdChandler, AZ 85225pfm.comWe are pleased to submit this engagement letter to provide the City of Riverside Cityfinancial advisory services related to the Inflation Reduction Act (IRA). The work for this assignment will be performed in accordance with this engagement letter and PFM Financial the City dated July 26, 2023. We understand that the City has identified its biogas project as a potential opportunity for tax credits under the Inflation Reduction Act. The process to receive the tax credit is relatively complex and time consuming. PFM is currently assisting several municipal entities in navigating the evolving guidance from the U.S. Treasury and the Internal Revenue Service on the requirements for the application of incentives. We would be excited to assist the City with the tax credit application process. The scope described in this proposal is applicable only to the biogas project and assumes an eligible project cost of the biogas project of approximately $10.5 million. This Engagement Letter defines the scope of services PFM will provide related to the IRA. The work completed under this project will be a collaborative effort amongst members of our financial advisory team including Darren Hodge and Chris Lover, with additional support provided by other professionals with specialized expertise related to the IRA, as necessary. PFM will provide services as set forth in Exhibit A to this Engagement Letter. For the services described in Exhibit AExhibit A. To the extent the tax credit application is not submitted, PFM and the City will negotiate payment based on services rendered to the point at which the engagement was cancelled. services will commence as soon as practicable after the execution of this Engagement Letter by the City. In addition to the compensation for our services described above, PFM would expect to be reimbursed at cost for travel, meals, lodging, computer, communications, data, reproduction, graphics, express mail, legal fees and any other out of pocket expenses. Appropriate documentation and third party receipts will be provided with each invoice. If this arrangement is acceptable to you, please sign the attached page and return it to Darren.
June 6, 2024
2 Please feel free to reach out to Darren with any questions or comments. We look forward to the City on this project. Sincerely, Darren Hodge Managing Director Chris Lover Managing Director
June 6, 2024
3 Exhibit A: Scope of Work (Proposed Fixed Fee: $75,000) 1.Education, Updates and Background. Provide education materials and up to threepresentations to City staff and other stakeholders including elected leaders, ifrequested, regarding key provisions of the Inflation Reduction Act (IRA) relevant toCity.2.Lead the diligence effort that is necessary for the eventual, successful application ofthe Investment Tax Credit or Production Tax Credit once the project has reachedCommercial Operation.3.Coordinate with bond counsel, tax counsel, auditors (to include cost segregationfirms) and other members of the financing team to address other legal and taxmatters as they apply to the IRA.4.As required, conduct necessary coordination and discussions with selectedengineering firms to ensure these firms understand their role and responsibilitieswith IRA information requirements as they pertain to Davis-Bacon wages,apprenticeship programs and domestic content.5.Lead and manage regularly scheduled meetings with the established to ensure efforts remain on track for the successful, application for the incentive.6.The diligence team, in experience, should include:a.Procurement. It is critical that Contracts are reviewed to determine if allrequirements of the Act are incorporated such as:i.Provide proof of adherence to the Davis Bacon Act for labor and wages forthe classes of laborers and mechanics on the jobsiteii.Provide proof that the contractor (if more than four employees on the site)use or attempted to use a federally recognized apprenticeship program.iii.Track and maintain records which demonstrate that orders for steel or ironand Manufactured Products Requirement are met in order to receive creditfor domestic content. Recently released guidance from the U.S. Treasuryindicates that, for the Direct Pay Option, applicable to municipal entities,domestic content is a requirement. City should follow the generalrecordkeeping requirements under the Internal Revenue Code section 6001to document compliance.b.Project Manager - Ensures the construction company / contractor is incompliance with all bid specifications for the requirements of the Act. TheProject Manager is best positioned to request the Design-Builder submitrequired documentation to support domestic content bonus, certified payrollsand meeting apprenticeship requirements. We recommend that documentation June 6, 2024
4 is provided to the Project Manager as soon as available and saved for future reporting needs. c.Legal. Given the significance of the key provisions, contracts should haveindemnification language that, if the contractor fails to provide sufficient andadequate proof of compliance with fair wage and apprenticeship, there will becompensatory damages. PFM does not otherwise provide legal representationor advice.d.Human Resources. Provide guidance, expertise and oversight of how thecontracted parties will adhere to the requirement of the Davis-Bacon ActRequirements and the determination of a fair wage across labor classifications.e.Accounting & Finance. Project codes should be identified in the accountingsystem to track internal employee hours directly linked to working on theplanning, design and construction of the Project. In prior years, with incentivessimilar to the ITC, the entity that completed the project is permitted to embedthe internal costs of person-hours associated with the project as part of projectcosts. Additionally, can provide knowledge and expertise on the resourcing ofthe project given the time delay between the start of construction, applicationsubmission and receipt of the incentive.f.Bond and Tax Counsel. Can assist with the interpretation of qualified costs aswell as the ability to issue taxable or tax-exempt debt. Can also provide anopinion on the start construction date. This is a significant date to theU.S. Treasury as it will determine how the Key Provisions and otherrequirements are met as these generally become more stringent andburdensome overtime.g.Auditor (Cost Segregation). aprovide their formal opinion (likely required with the application and required ifThe Cost Segregation could identify other components of the project that areproject to the grid. Additionally, PFM has seen instances where a time and effort to develop the project and see to its completion and increasingthe potential amount of the ITC received.h.Financial Advisor - PFM. As the municipal advisor, PFM will work with Auditand Finance team members, to assess how to structure the financing of theproject. The responsibility to meet the receive a evenwith smaller projects. The inability of the developer to provide validation ofmeeting some or all of the key provisions can have a significant impact on theincentive received.
June 6, 2024
5 7.PFM will coordinate the process for the application of the ITC. While much of theinformation will come from outside sources (auditor/cost segregator, legal, tax,developers/contractors, procurement, finance), PFM will conduct the necessarymeetings and put in place processes and disciplined structures to assist with theapplication of the incentive.8.PFM will provide continuous updates to reflect ongoing U.S. Treasury guidance onthe application process and impacts to the expected ITC.9.Assist with the registration of the project in the applicable database/portal.10.If necessary, provide supporting data and information throughout the applicationreview process to U.S. Treasury to support the submission.
EXHIBIT “B-1” COMPENSATION (IRA)
June 6, 2024
1 Edward Enriquez, Chief Financial Officer City of Riverside 3900 Main Street, 6th Floor Riverside, CA 92522 Dear Edward: 1820 East Ray RdChandler, AZ 85225pfm.comWe are pleased to submit this engagement letter to provide the City of Riverside Cityfinancial advisory services related to the Inflation Reduction Act (IRA). The work for this assignment will be performed in accordance with this engagement letter and PFM Financial the City dated July 26, 2023. We understand that the City has identified its biogas project as a potential opportunity for tax credits under the Inflation Reduction Act. The process to receive the tax credit is relatively complex and time consuming. PFM is currently assisting several municipal entities in navigating the evolving guidance from the U.S. Treasury and the Internal Revenue Service on the requirements for the application of incentives. We would be excited to assist the City with the tax credit application process. The scope described in this proposal is applicable only to the biogas project and assumes an eligible project cost of the biogas project of approximately $10.5 million. This Engagement Letter defines the scope of services PFM will provide related to the IRA. The work completed under this project will be a collaborative effort amongst members of our financial advisory team including Darren Hodge and Chris Lover, with additional support provided by other professionals with specialized expertise related to the IRA, as necessary. PFM will provide services as set forth in Exhibit A to this Engagement Letter. For the services described in Exhibit AExhibit A. To the extent the tax credit application is not submitted, PFM and the City will negotiate payment based on services rendered to the point at which the engagement was cancelled. services will commence as soon as practicable after the execution of this Engagement Letter by the City. In addition to the compensation for our services described above, PFM would expect to be reimbursed at cost for travel, meals, lodging, computer, communications, data, reproduction, graphics, express mail, legal fees and any other out of pocket expenses. Appropriate documentation and third party receipts will be provided with each invoice. If this arrangement is acceptable to you, please sign the attached page and return it to Darren.
June 6, 2024
2 Please feel free to reach out to Darren with any questions or comments. We look forward to the City on this project. Sincerely, Darren Hodge Managing Director Chris Lover Managing Director
June 6, 2024
3 Exhibit A: Scope of Work (Proposed Fixed Fee: $75,000) 1.Education, Updates and Background. Provide education materials and up to threepresentations to City staff and other stakeholders including elected leaders, ifrequested, regarding key provisions of the Inflation Reduction Act (IRA) relevant toCity.2.Lead the diligence effort that is necessary for the eventual, successful application ofthe Investment Tax Credit or Production Tax Credit once the project has reachedCommercial Operation.3.Coordinate with bond counsel, tax counsel, auditors (to include cost segregationfirms) and other members of the financing team to address other legal and taxmatters as they apply to the IRA.4.As required, conduct necessary coordination and discussions with selectedengineering firms to ensure these firms understand their role and responsibilitieswith IRA information requirements as they pertain to Davis-Bacon wages,apprenticeship programs and domestic content.5.Lead and manage regularly scheduled meetings with the established to ensure efforts remain on track for the successful, application for the incentive.6.The diligence team, in experience, should include:a.Procurement. It is critical that Contracts are reviewed to determine if allrequirements of the Act are incorporated such as:i.Provide proof of adherence to the Davis Bacon Act for labor and wages forthe classes of laborers and mechanics on the jobsiteii.Provide proof that the contractor (if more than four employees on the site)use or attempted to use a federally recognized apprenticeship program.iii.Track and maintain records which demonstrate that orders for steel or ironand Manufactured Products Requirement are met in order to receive creditfor domestic content. Recently released guidance from the U.S. Treasuryindicates that, for the Direct Pay Option, applicable to municipal entities,domestic content is a requirement. City should follow the generalrecordkeeping requirements under the Internal Revenue Code section 6001to document compliance.b.Project Manager - Ensures the construction company / contractor is incompliance with all bid specifications for the requirements of the Act. TheProject Manager is best positioned to request the Design-Builder submitrequired documentation to support domestic content bonus, certified payrollsand meeting apprenticeship requirements. We recommend that documentation June 6, 2024
4 is provided to the Project Manager as soon as available and saved for future reporting needs. c.Legal. Given the significance of the key provisions, contracts should haveindemnification language that, if the contractor fails to provide sufficient andadequate proof of compliance with fair wage and apprenticeship, there will becompensatory damages. PFM does not otherwise provide legal representationor advice.d.Human Resources. Provide guidance, expertise and oversight of how thecontracted parties will adhere to the requirement of the Davis-Bacon ActRequirements and the determination of a fair wage across labor classifications.e.Accounting & Finance. Project codes should be identified in the accountingsystem to track internal employee hours directly linked to working on theplanning, design and construction of the Project. In prior years, with incentivessimilar to the ITC, the entity that completed the project is permitted to embedthe internal costs of person-hours associated with the project as part of projectcosts. Additionally, can provide knowledge and expertise on the resourcing ofthe project given the time delay between the start of construction, applicationsubmission and receipt of the incentive.f.Bond and Tax Counsel. Can assist with the interpretation of qualified costs aswell as the ability to issue taxable or tax-exempt debt. Can also provide anopinion on the start construction date. This is a significant date to theU.S. Treasury as it will determine how the Key Provisions and otherrequirements are met as these generally become more stringent andburdensome overtime.g.Auditor (Cost Segregation). aprovide their formal opinion (likely required with the application and required ifThe Cost Segregation could identify other components of the project that areproject to the grid. Additionally, PFM has seen instances where a time and effort to develop the project and see to its completion and increasingthe potential amount of the ITC received.h.Financial Advisor - PFM. As the municipal advisor, PFM will work with Auditand Finance team members, to assess how to structure the financing of theproject. The responsibility to meet the receive a evenwith smaller projects. The inability of the developer to provide validation ofmeeting some or all of the key provisions can have a significant impact on theincentive received.
June 6, 2024
5 7.PFM will coordinate the process for the application of the ITC. While much of theinformation will come from outside sources (auditor/cost segregator, legal, tax,developers/contractors, procurement, finance), PFM will conduct the necessarymeetings and put in place processes and disciplined structures to assist with theapplication of the incentive.8.PFM will provide continuous updates to reflect ongoing U.S. Treasury guidance onthe application process and impacts to the expected ITC.9.Assist with the registration of the project in the applicable database/portal.10.If necessary, provide supporting data and information throughout the applicationreview process to U.S. Treasury to support the submission.