Kosmont Companies
Mailing Address: 1601 N. Sepulveda Blvd., #382 (424) 297-1070 Physical Address: 2301 Rosecrans Ave, Ste. 4140 Manhattan Beach, CA 90266 www.kosmont.com El Segundo, CA 90245
September 29, 2023
Lisa Brinton
Director of Community Development
City of Salinas
65 West Alisal Street, 2
nd Floor
Salinas, CA 93901
Re: Proposal for Financing District (EIFD and CFD) Formation Advisory
Dear Ms. Brinton:
Kosmont & Associates, Inc. doing business as Kosmont Companies (“Kosmont”) is pleased to present this proposal to the City of Salinas (“City” or “Client”) for financing district formation advisory, with particular emphasis on an Enhanced Infrastructure Financing District (“EIFD”) and a Community Facilities District (“CFD”) for the Salinas Ag-Industrial Center (“SAIC”) Specific Plan area within the City. This proposal serves as an Agreement when executed and returned by Client to Kosmont.
I. INTRODUCTION
Kosmont, a certified Minority Business Enterprise (“MBE”) and Small Business Enterprise (“SBE”), was founded in 1986 by Larry J. Kosmont, Chairman and CEO. Kosmont is a full-service local government, economics, and real estate advisory firm with an award-winning track record of working with cities, counties, and other public agencies on economic development plans, infrastructure funding strategies, land use market analyses, business/industry attraction, and real estate projects and public finance transactions exceeding $12 billion.
Kosmont is extremely well-suited to provide the requested advisory services to the City, given our extensive experience in the evaluation and implementation of tax increment financing (“TIF”) districts such as EIFD and other innovative public -private funding sources and financing mechanisms. Our firm possesses an unprecedented level of understanding, strategic thinking, and hands-on expertise necessary to successfully implement these tools for the City, potentially in partnership with the County of Monterey (“County”).
Across the State of California, Kosmont has facilitated the successful formation of more TIF Districts than any other firm since the dissolution of Redevelopment Agencies in 2012 (11 of the approximately 20 fully-formed EIFDs thus far). No other firm has been as successful in facilitating multi-jurisdictional (e.g., city/county) partnerships in such special districts, and Kosmont has done City of Salinas
Proposal for EIFD+CFD Formation
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so in four different communities, with over 50 other city and county TIF/EIFD evaluations and formations currently underway.
Affiliated Securities and Exchange Commission ( SEC) licensed entity Kosmont Financial Services has additionally facilitated the first debt issuances to be repaid from EIFD tax increment for the City of La Verne and County of Los Angeles EIFD and the Sacramento County Unincorporated Metro Air Park EIFD. We specialize in the overlap and combination of multiple available infrastructure funding and financing tools, such as EIFD, CFD, specific grant sources, and private sector contributions.
For this engagement, Kosmont is partnering with NBS Government Financing Group (“NBS”) for CFD formation services. NBS has supported thousands of special financing districts, including CFDs ( for infrastructure, maintenance, and services), assessment districts, and other similar mechanisms. Kosmont and NBS are referred to collectively as “Consultant” in this proposal.
Together, our team is qualified, prepared, and enthusiastic to provide requested services.
We look forward to assisting the City with the requested advisory services and are available to discuss our proposal at your convenience.
II. BACKGROUND AND OBJECTIVE
Consultant understands that in 2010, the City Council adopted the SAIC Specific Plan, with the primary objectives of establishing opportunity sites for new and relocating ag-related industries and to promote the associated industrial job creation and retention. The SAIC includes approximately 257 acres for agricultural industry expansion and cluster development with focus on food storage, warehousing, food processing, packaging suppliers and other ag support uses.
Almost 13 years later, the SAIC remains undeveloped largely due to costs associated with building necessary backbone infrastructure. Recent estimates calculate the cost of infrastructure required to support both Phase 1 and Phase 2 SAIC development to be over $69 million dollars, making future development of the SAIC financially infeasible for developers or the property owner.
The City engaged a third- party economic consultant to revisit the use of an EIFD as a potential infrastructure funding source for the SAIC. A 2023 update of the SAIC EIFD feasibility analysis prepared in 2016 confirmed that that an EIFD was a viable infrastructure funding source. The City has initiated conversations with the County about its participation in an EIFD, but deal terms have not yet been established or agreed upon.
The City now wishes to implement an EIFD with a parallel CFD to provide additional funding capacity. Consultant proposes the following scope of services accordingly.
III. SCOPE OF SERVICES
Approach to Tasks: The prospective assignment and consulting services that Consultant will provide will be of a relatively limited scope and duration, and advisory in nature. Consultant will City of Salinas
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be making recommendations only, which advis e the Client and jurisdictions , including their elected officials, appointed officials, and staff, which they can accept or reject by . None of Consultant's staff will act in a capacity as an elected official, nor appointed official, nor as staff, nor as serving in a "designated" position.
Task 1: Kickoff and Review of Previous SAIC Funding and Financing Analysis Consultant will coordinate a kickoff meeting with City staff to discuss project objectives, schedule, and deliverables. Consultant anticipates review and discussion of the previous SAIC funding and financing analysis, as well as the availability of updated project data, such as estimates of capital costs and operations and maintenance costs. If the City needs assistance in creating cost estimates, NBS has developed a cost estimation tool that can be employed to calculate the estimated costs.
Task 2: Preparation of Updated Financial and Fiscal Analysis Though the previous SAIC financial analysis was not made available for Consultant’s review prior to preparing this proposal, Consultant anticipates needing to update and/or refine previous analysis prior to initiating implementation of an EIFD and a CFD. As appropriate, Consultant will prepare updated analysis of district boundaries, development projections, EIFD tax allocation percentages, CFD special tax scenarios, district durations, and corresponding estimates of funding capacity. Estimates of potential bonding capacity will be prepared by Kosmont Financial Services, registered Municipal Advisor.
Consultant will prepare an updated analysis of fiscal revenues (e.g., property tax, sales tax) and fiscal expenditures (e.g., public safety, community services) and the resulting net fiscal impact to the City and the County from district implementation over time. It should be noted that such fiscal impact analysis is required by legislation as part of district formation. Consultant will utilize an IMPLAN-based analysis to additionally quantify estimated employment, labor income (wages), and economic output benefits on a direct, indirect, and induced basis across the larger County region.
Task 3: Stakeholder Outreach
Consultant will assist the City with outreach to public and private sector entity stakeholders, potentially including, but not limited to:
• City Councilmembers
• County Administrative Office / Auditor-Controller / Treasurer / Tax Collector / Property Tax Manager / Economic Development / Public Works staff
• County Board of Supervisors
• Major district area property owners, developers, businesses, and/or registered voters.
Consultant will accordingly assist with preparation and presentation of EIFD and CFD analysis materials as appropriate for such outreach. Based on stakeholder feedback, Consultant will refine preliminary tax increment and special tax projections and related funding and financing analysis.
The goal of this Task is to receive direction/confirmation on which taxing entities would proceed with EIFD and CFD formation initially, recognizing that other taxing entities may join in a subsequent year. Consultant will prepare a detailed timeline through district formation accordingly. The City could also determine not to proceed with either EIFD or CFD.
City of Salinas
Proposal for EIFD+CFD Formation
September 29, 2023
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Task 4: Resolution of Intention (ROI) and Establishment of the Public Financing Authority Consultant will assist with determination of refined district boundaries and governing Public Financing Authority (“PFA”) board composition as required for adoption of the Resolution of Intention (“ROI”) to initiate EIFD formation proceedings.
Consultant will assist City staff and the City Attorney’s office (and potentially County staff and County Counsel) with the preparation of required documentation for the ROI. Consultant will assist with coordination and presentation at the required meeting(s) of the City Council (and potentially also County Board of Supervisors) to adopt the ROI and will assist with required noticing of the ROI following the legislative body actions.
In parallel, Consultant will assist in the preparation of the required resolution of intention for formation of the CFD.
Task 5: Preparation of Formation Documentation
Consultant will collaborate with City staff on the preparation of the required Infrastructure Financing Plan (“IFP”) and related appendices. The IFP must include a legal description of district boundaries, public improvements to be implemented, location, timing, and costs of development and financial assistance, finalized tax increment projections, intention to incur debt (e.g., bonds), district termination date, taxing entity fiscal impact analysis, and replacement housing obligations.
Consultant will assist City staff (e.g., Clerk’s office) in the required distribution of the IFP to property owners within the EIFD and to affected taxing entities. Consultant will assist the City in drafting and coordinating the required noticing (e.g., website, mailing, newspaper notices) of the PFA meeting and hearings for IFP approval and EIFD formation. Consultant is additionally pleased to assist with draft staff report content.
As it pertains to the CFD, Consultant will prepare the Rate and Method of Apportionment of Special Tax (“RMA”). Given recent changes to the CFD law, it will be particularly important to address Accessory Dwelling Units and the Welfare Exemption among other specifics. We are conscientious in striking the right balance between compliance, complexity, and clarity.
Task 6: Formation Meetings and Hearings
Consultant will assist in coordination, preparation, and presentation of required materials at the required City Council and PFA meetings and hearings to approve the IFP and form the EIFD. While Consultant is not a law firm / attorney, we will provide draft content for required resolutions for review by the City Attorney’s office and/or other designated counsel. Consultant anticipates two PFA public meetings, three PFA public hearings, and one City Council meeting as part of this task (this budget assumes that Consultant will participate in -person for some meetings and virtually for others, as deemed mutually appropr iate by the City and Consultant).
Once the EIFD is successfully formed, Consultant will assist City staff in completing the required EIFD filings with the State Board of Equalization.
For CFD formation in parallel, Consultant will provide input and review of CFD formation documentation (e.g., resolution of formation, authorization to issue debt) to ensure alignment in the overall EIFD/CFD financing plan.
City of Salinas
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September 29, 2023
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(Please note: as an optional service not currently included in this Scope of Work, we are equipped to assist with the CFD election, whether that is coordination with the County Registrar to conduct a registered voter election or with legal counsel in the conduct of a landowner election.)
Potential Future Phase Tasks (Not Part of this Scope of Work) Municipal Advisory activities related to potential EIFD/CFD debt issuances to be provided by Kosmont Financial Services, registered Municipal Advisor.
IV. SCHEDULE
Consultant is prepared to commence work upon receipt of this executed Agreement. Consultant anticipates a district formation timeline of approximately 12-15 months as outlined below.
V. COMPENSATION
The compensation for Tasks 1 through 6 is outlined below for professional services (hourly) fees at Consultant’s billing rates as reflected on Attachment A.
TASKS ESTIMATED BUDGET
1) Kickoff and Review of Previous Analysis $9,500
2) Preparation of Updated Analysis $15,000
3) Stakeholder Outreach $19,500
4) Resolution of Intention and PFA Formation $12,500
5) Preparation of Formation Documentation $35,000
6) Formation Meetings and Hearings $37,500
Not-to-Exceed Total Professional Services (Hourly) Fees $129,000 Nov Dec Jan Feb Mar Apr May Jun Jul Aug Oct Nov Dec Jan Feb 1 Kickoff and Review of Previous
Analysis X
2 Preparation of Updated
Analysis X X X
3 Stakeholder Outreach X X X
4 Resolution of Intention and
PFA Formation X X
5 Preparation of Formation
Documentation X X X
6 Formation Meetings and
Hearings X X X X X X
2023 2024 2025
City of Salinas
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Budget may be re-allocated between Tasks as may be needed to provide adequate services to Client. Budget may be increased by Client at any time.
Consultant’s attendance or participation at any publicly noticed meeting in addition to those listed in Tasks 1 through 6, whether such participation is in person, digital, video and/or telephonic (e.g., City Council, Planning Commission, Public Agency Board, other), as requested by Client is in addition to compensation for Tasks 1 through 6 and will be billed at the professional services (hourly) fees as shown on Attachment A.
Services will be invoiced monthly at Consultant’s standard billing rates, as shown on Attachment A. In addition to professional services (hourly) fees, invoices will include reimbursement for out- of-pocket expenses such as travel and mileage (provided that there shall be no overnight travel without the Client’s prior approval and that mileage shall be reimbursed at the current IRS mileage reimbursement rate), professional printing, conference calls, and delivery charges for messenger and overnight packages at actual cost. Unless otherwise agreed to in advance, out-of-area travel, if any, requires advance funding of flights and hotel accommodations.
Consultant will also include in each invoice an administrative services fee to cover in-house copy, fax, telephone and postage costs equal to four percent (4.0%) of Consultant’s monthly professional service fees incurred. Any unpaid invoices after 30 days shall accrue interest at the rate of 10% per annum.
For the convenience of Kosmont’s clients, we offer a secure credit card payment service. The credit card payment link is: https://kosmont.paidyet.com and there are two ways to make a secure
credit card payment:
1. Fill in the “Make a Payment” form when you go to the link (https://kosmont.paidyet.com), or
2. Call Kosmont Companies’ accounting desk (Ms. Reny Sultan; (424) 297-1072) to make a credit card payment
Consultant is prepared to commence work upon receipt of executed Agreement.
DISCLOSURE: Compensation for possible future transaction-based services or brokerage services.
The following is being provided solely as an advance disclosure of possible real estate brokerage and finance services and potential compensation for such services. This disclosure is not intended to commit the Client.
When assignments involve real estate/property brokerage services, such transaction- based services are typically provided by Kosmont Real Estate Services, Inc. dba Kosmont Realty (“KR”) is licensed by the State of California Department of Real Estate (License# 02058445).
Compensation to KR is typically paid through commissions for property sale transactions, lease transactions and success/broker fees. KR also provides Broker Opinions of Value (“BOV”) services on a fixed fee basis.
City of Salinas
Proposal for EIFD+CFD Formation
September 29, 2023
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When assignments involve public finance services on behalf of a public agency, such municipal advisory services are provided by Kosmont Financial Services (KFS). KFS is an independent Registered Municipal Advisor with the Securities and Exchange Com mission and the Municipal Securities Rulemaking Board.
SEC registration does not constitute an endorsement of the firm by the Commission or state securities regulators.
VI. OTHER PROVISIONS
A. Termination. Client or Consultant shall have the right to terminate this Agreement at any time upon written notification to the other party. Payment for fees accrued through the date of termination shall be remitted in full.
B. Arbitration. Any controversy or claim arising out of or in relation to this Agreement, or the making, performance, interpretation or breach thereof, shall be settled by arbitration at JAMS in Los Angeles, California. Each of the parties to such arbitration proceeding shall be entitled to take up to five depositions with document requests. The provisions of Section 1283.05 (except subdivision (e) thereof) of the California Code of Civil Procedure are incorporated by reference herein, except to the extent they conflict with this Agreement, in which case this Agreem ent is controlling. If the matter is heard by only one arbitrator, such arbitrator shall be a member of the State Bar of California or a retired judge. If the matter is heard by an arbitration panel, at least one member of such panel shall be a member of the State Bar of California or a retired judge.
The arbitrator or arbitrators shall decide all questions of law, and all mixed questions of law and fact, in accordance with the substantive law of the State of California to the end that all rights and defenses which either party may have asserted in a court of competent jurisdiction shall be fully available to such party in the arbitration proceeding contemplated hereby. The arbitrator and arbitrators shall set forth and deliver their findings of fact and conclusions of law with the delivery of the arbitration award. Judgment upon the award rendered shall be final and non -appealable and may be entered in any court having jurisdiction.
C. Attorneys' Fees. In the event of any legal action, arbitration, or proceeding arising out of an alleged breach of this Agreement, the party prevailing in such legal action, arbitration, or proceeding shall be entitled to recover reasonable attorneys' fees, expenses and costs, as well as all actual attorneys' fees, expenses and cost incurred in enforcing any judgment entered.
D. Authority. Each of the parties executing this Agreement warrants that persons duly authorized to bind each such party to its terms execute this Agreement.
E. Further Actions. The parties agree to execute such additional documents and take such further actions as may be necessary to carry out the provisions and intent of this Agreement.
F. Assignment. Neither this Agreement nor any of the rights or obligations hereunder may be assigned by either party without the prior written consent of the other party.
G. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
City of Salinas
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September 29, 2023
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H. Entire Agreement; Amendments and Waivers. This Agreement contains the entire agreement between the parties relating to the transactions contemplated hereby and any and all prior discussions, negotiations, commitments and understanding, whether written or oral, related hereto are superseded hereby. No addition or modification of any term or provision of this Agreement shall be effective unless set forth in writing signed by both parties. No waiver of any of the provisions of this Agreement shall be deemed to constitute a waiver of any other provision hereof (whether or not similar), nor shall such waiver constitute a continuing waiver of such provisions unless otherwise expressly provided. Each party to this Agreement has participated in its drafting and, therefore, ambiguities in this Agreement will not be construed against any party to this Agreement.
I. Severability. If any term or provision of this Agreement shall be deemed invalid or unenforceable, the remainder of this Agreement shall not be affected thereby, and each remaining term and provision of this Agreement shall be valid and in force to the fullest extent permitted by law.
J. Notices. All notices, requests, demands and other communications which may be required under this Agreement shall be in writing and shall be deemed to have been received when transmitted; if personally delivered, if transmitt ed by telecopier, electronic or digital transmission method, upon transmission; if sent by next day delivery to a domestic address by a recognized overnight delivery service (e.g., Federal Express), the day after it is sent; and if sent by certified or registered mail, return receipt requested, upon receipt. In each case, notice shall be sent to the principal place of business of the respective party. Either party may change its address by giving written notice thereof to the other in accordance with the provisions of this paragraph.
K. Titles and Captions. Titles and captions contained in this Agreement are inserted only as a matter of convenience and for reference and in no way define, limit, extend or describe the scope of this Agreement or the intent of any provision herein.
L. Governing Law. The statutory, administrative and judicial law of the State of California (without reference to choice of law provisions of California law) shall govern the execution and performance of this Agreement.
M. Confidentiality. Each of the parties agrees not to disclose this Agreement or any information concerning this Agreement to any persons or entities, other than to their attorneys and accountants, or as otherwise may be required by law.
N. Counterparts. This Agreement may be executed in one or more counterparts, each of which constitutes an original, and all of which together constitute one and the same instrument. The signature of any person on a telecopy of this Agreement, or any notice, action or consent taken pursuant to this Agreement shall have the same full force and effect as such person's original signature.
O. Disclaimer. Consultant’s financial analysis activities and work product, which may include but is not limited to pro forma analysis a nd tax projections, are projections only. Actual results may differ materially from those expressed in the analysis performed by Consultant due City of Salinas
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to the integrity of data received, market conditions, economic events and conditions, and a variety of factors that could materially affect the data and conclusions. Client’s reliance on Consultant’s analysis must consider the foregoing.
Consultant services outlined and described herein are advisory services only. Any decisions or actions taken or not taken by Client and affiliates, are deemed to be based on Client’s understanding and by execution of this Agreement, acknowledgement that Consultant’s services are advisory only and as such, cannot be relied on as to the results, performance and conclusions of any investment or project that Client may or may not undertake as related to the services provided including any verbal or written communications by and between the Client and Consultant.
Client acknowledges that Consultant's use of work product is limited to the purposes contemplated within this Agreement. Consultant makes no representation of the work product's application to, or suitability for use in, circumstances not contemplated by the scope of work under this Agreement.
P. L imitation of Damages. In the event Consultant is found liable for any violation of duty, whether in tort or in contract, damages shall be limited to the amount Consultant has received from Client.
Q. Force Majeure. Consultant shall not be liable for failure or delay in performance of its obligations under this Agreement arising out of or caused, directly or indirectly, by significant circumstances beyond its reasonable control, including, without limitation: epidemic; acts of God; earthquakes; fires; floods; wars; civil or military disturbances; acts of terrorism; sabotage; strikes; riots; wide-spread power failures and wide-spread internet failure. Contractual performance and deadline(s) shall be extended for a period equal to the time lost by reason of the delay.
R. Expiration of Proposal for Services . If this Agreement is not fully executed by the parties within thirty (30) days from the date of this letter, this proposal shall expire.
S. Not an agreement for Legal Services or Legal Advice. This Agreement does not constitute an agreement for the performance of legal services or the provision of legal advice, or legal opinion. Client should seek independent legal counsel on matters for which Client is seeking legal advice.
City of Salinas
Proposal for EIFD+CFD Formation
September 29, 2023
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VII. ACCEPTANCE AND AUTHORIZATION
If this Agreement is acceptable to Client, please execute two copies of the Agreement and return both originals to Kosmont Companies. Upon receipt of both signed contracts, we will return one fully executed original for your files. Kosmont will commence work upon receipt of executed Agreement.
Read, understood, and agreed to this
____ Day of _______________ 2023
City of Salinas Kosmont & Associates, Inc.
doing business as “Kosmont Companies”
By: _________________________ By: _________________________ (Signature) (Signature)
Name: Name: Larry J. Kosmont CRE®
(Print Name)
Its: Its: Chairman & CEO
(Title)
City of Salinas
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ATTACHMENT A
Kosmont Companies
2023 Public Agency Fee Schedule
Professional Services
Chairman & CEO $445.00/hour
President $385.00/hour
Sr. Vice President/Sr. Advisor/Sr. Managing Director $350.00/hour Vice President/Project Advisor $225.00/hour Senior Project Analyst $195.00/hour
Project Analyst/Project Research $165.00/hour
Assistant Project Analyst/Assistant Project Manager $125.00/hour Project Promotion/Graphics/GIS Mapping Services $ 95.00/hour Clerical Support $ 70.00/hour
Additional Expenses
In addition to professional services (labor fees):
1) An administrative fee for in- house copy, fax, phone, postage costs, digital/technological support and related administrative expenses will be charged, which will be computed at four percent (4.0 %) of monthly Kosmont Companies professional service fees incurred; plus
2) Out-of-pocket expenditures, such as travel and mileage, professional printing, and delivery charges for messenger and overnight packages will be charged at cost. 3) Project/Market data sources for support of evaluation and analysis e.g., ESRI, Placer.ai, CoStar/STR, IMPLAN, ParcelQuest and other based on quoted project cost. 4) If Kosmont retains Third Party Vendor(s) for Client (with Client’s advance approval), fees and cost will be billed to Client at 1.1X (times) fees and costs. 5) Consultant’s attendance or participation at any public meeting, whether such participation is in person, digital, video and/or telephonic (e.g., City Council, Planning Commission, Public Agency Board, other) requested by Client and are beyond those specifically identified in the Scope of Work will be billed at the professional serv ices (hourly) fees as shown on this Attachment A.
• Charges for Court/Deposition/Expert Witness-Related Appearances Court-related (non-preparation) activities, such as court appearances, depositions, mediation, arbitration, dispute resolution and other expert witness activities, will be charged at a court rate of 1.5 times scheduled rates, with a 4-hour minimum.
Rates shall remain in effect until June 30, 2024.
City of Salinas
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NBS Hourly Rates
Title Hourly Rate
Director / Senior Review $250
Associate Director / Engineer $225
Senior Consultant $200
Consultant $175
Project Analyst $150
Project Resource Analyst $130
Clerical / Support $110