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HomeMy Public PortalAbout055-2016 - Sanitary - HJ Umbaugh - Financial ServicesORIGINAL AGREEMENT THIS AGREEMENT made and entered into this 3L day of INS 0<1 , 2016, and referred to as Contract No 55-2016 by and between the City of Richmond, Indiana, a municipal corporation acting by and through its Board of Sanitary Commissioners (referred to as the "City"), and H.J. Umbaugh & Associates, LLP, 8365 Keystone Crossing, Suite 300, Indianapolis, Indiana 46240 (hereinafter referred to as the "Contractor"). SECTION 1. STATEMENT AND SUBJECT OF WORK City hereby retains Contractor for the work described on Exhibit "A" attached hereto. The City must comply with 329 IAC 10-39-2 as the same pertains to the applicable financial test contained within certain subsections therein. Contractor shall provide services to the City relative to this obligation using the procedures set forth on Exhibit "A" attached hereto, and will issue its findings to the City. Should any provisions, terms, or conditions contained in any of the documents attached hereto and incorporated by reference herein as Exhibits, conflict with any of the provisions, terms, or conditions of this Agreement, this Agreement shall be controlling. The Contractor shall furnish all labor, material, equipment, and services necessary for the proper completion of all work specified. Contractor shall submit statements or bills monthly. No performance of services shall commence until the following has been met: 1. The City is in receipt of any required certificates of insurance and/or warranties; 2. The City is in receipt of any required affidavit(s) signed by Contractor in accordance with I.C. § 22-5-1.7-11(a)(2); and 3. A purchase order has been issued by the Purchasing Department. SECTION II. STATUS OF CONTRACTOR Contractor shall be deemed to be an independent contractor and is not an employee or agent of the City of Richmond. The Contractor shall provide, at its own expense, competent supervision of the work. SECTION III. COMPENSATION City shall pay Contractor at the rates indicated in Exhibit "B". Specifically, City shall pay to the Contractor the hourly rates set forth on Exhibit "B"; however, the consideration under this Agreement shall not exceed the sum of Five Thousand Five Hundred Dollars and 00/100 ($5,500.00). SECTION IV. TERM OF AGREEMENT This Agreement shall become effective when signed by all of the parties hereto. Notwithstanding the term of this Agreement, City may terminate this Agreement in whole or in part, for cause, at any time by giving at least thirty (30) days written notice specifying the effective date and the reasons for termination which shall include but are not be limited to the following: a. failure, for any reason of the Contractor to fulfill in a timely manner 1 1 P a a Contract No. 55-2016 its obligations under this Agreement; b. submission of a report, other work product, or advice, whether oral or written, by the Contractor to the City that is incorrect, incomplete, or does not meet reasonable professional standards in any material respect; c. ineffective or improper use of funds provided under this Agreement; d. suspension or termination of the grant funding to the City under which this Agreement is made; or e. unavailability of sufficient funds to make payment on this Agreement. This Agreement may also be terminated by either the City or the Contractor, in whole or in part, by mutual Agreement setting forth the reasons for such termination, the effective date, and in the case of partial termination, the portion to be terminated. This Agreement may also be terminated by either the City or the Contractor, without cause, by giving at least thirty (30) days written notice to the other party. In the event of termination of this Agreement, the City shall be required to make payment for all work performed prior to the date this Agreement is terminated, but shall be relieved of any other responsibility herein. SECTION V. INDEMNIFICATION AND INSURANCE Contractor agrees to obtain insurance and to indemnify the City for any damage or injury to person or property or any other claims which may arise from the Contractor's conduct or performance of this Agreement, either intentionally or negligently; provided, however, that nothing contained in this Agreement shall be construed as rendering the Contractor liable for acts of the City, its officers, agents, or employees. Contractor shall as a prerequisite to this Agreement, purchase and thereafter maintain such insurance as will protect it from the claims set forth below which may arise out of or result from the Contractor's operations under this Agreement, whether such operations by the Contractor or by any sub -contractors or by anyone directly or indirectly employed by any of them, or by anyone for whose acts the Contractor may be held responsible. Coverne A. Worker's Compensation & Disability Requirements B. Employer's Liability C. Comprehensive General Liability Section 1. Bodily Injury Section 2. Property Damage D. Comprehensive Auto Liability Section 1. Bodily Injury Limits Statutory $100,000 $1,000,000 each occurrence $2,000,000 aggregate $1,000,000 each occurrence $1,000,000 each person 2 1 Pa q e Section 2. Property Damage E. Comprehensive Umbrella Liability Malpractice/Errors & Omissions Insurance $1,000,000 each occurrence $1,000,000 each occurrence $1,000,000 each occurrence $1,000,000 aggregate $1,000,000 each occurrence $2,000,000 aggregate SECTION VI. COMPLIANCE WITH WORKER'S COMPENSATION LAW Contractor shall comply with all provisions of the Indiana Worker's Compensation law, and shall, before commencing work under this Agreement, provide the City a certificate of insurance, or a certificate from the industrial board showing that the Contractor has complied with Indiana Code Sections 22-3-2-5, 22-3-5-1 and 22-3-5-2. If Contractor is an out of state employer and therefore subject to another state's worker's compensation law, Contractor may choose to comply with all provisions of its home state's worker's compensation law and provide the City proof of such compliance in lieu of complying with the provisions of the Indiana Worker's Compensation Law. SECTION VII. COMPLIANCE WITH INDIANA &VERIFY PROGRAM REQUIREMENTS Pursuant to Indiana Code 22-5-1.7, Contractor is required to enroll in and verify the work eligibility status of all newly hired employees of the contractor through the Indiana E-Verify program. Contractor is not required to verify the work eligibility status of all newly hired employees of the contractor through the Indiana E-Verify program if the Indiana E-Verify program no longer exists. Prior to the performance of this Agreement, Contractor shall provide to the City its signed Affidavit affirming that Contractor does not knowingly employ an unauthorized alien in accordance with IC 22-5-1.7-11 (a) (2). In the event Contractor violates IC 22-5-1.7 the Contractor shall be required to remedy the violation not later than thirty (30) days after the City notifies the Contractor of the violation. If Contractor fails to remedy the violation within the thirty (30) day period provided above, the City shall consider the Contractor to be in breach of this Agreement and this Agreement will be terminated. If the City determines that terminating this Agreement would be detrimental to the public interest or public property, the City may allow this Agreement to remain in effect until the City procures a new contractor. If this Agreement is terminated under this section, then pursuant to IC 22-5- 1.7-13 (c) the Contractor will remain liable to the City for actual damages. SECTION VIII. IRAN INVESTMENT ACTIVITIES Pursuant to Indiana Code (IC) 5-22-16.5, Contractor certifies that Contractor is not engaged in investment activities in Iran. In the event Board determines during the course of this Agreement that this certification is no longer valid, Board shall notify Contractor in writing of said determination and shall give contractor ninety (90) days within which to respond to the written notice. In the event Contractor fails to demonstrate to the Board that the Contractor has ceased investment activities in Iran within ninety (90) days after the written notice is given to the Contractor, the Board may proceed with any remedies it may have pursuant to IC 5-22-16.5. In the event the Board determines during the course of this Agreement that this certification is no longer valid and said determination is not refuted by 3 1 P a a e Contractor in the manner set forth in IC 5-22-16.5, the Board reserves the right to consider the Contractor to be in breach of this Agreement and terminate the agreement upon the expiration of the ninety (90) day period set forth above. SECTION IX. PROHIBITION AGAINST DISCRIMINATION A. Pursuant to Indiana Code 22-9-1-10, Contractor, any sub -contractor, or any person acting on behalf of Contractor or any sub -contractor shall not discriminate against any employee or applicant for employment to be employed in the performance of this Agreement, with respect to hire, tenure, terms, conditions or privileges of employment or any matter directly or indirectly related to employment, because of race, religion, color, sex, disability, national origin, or ancestry. B. Pursuant to Indiana Code 5-16-6-1, the Contractor agrees: That in the hiring of employees for the performance of work under this Agreement of any subcontract hereunder, Contractor, any subcontractor, or any person acting on behalf of Contractor or any sub -contractor, shall not discriminate by reason of race, religion, color, sex, national origin or ancestry against any citizen of the State of Indiana who is qualified and available to perform the work to which the employment relates; That Contractor, any sub -contractor, or any person action on behalf of Contractor or any sub -contractor shall in no manner discriminate against or intimidate any employee hired for the performance of work under this Agreement on account of race, religion, color, sex, national origin or ancestry; That there may be deducted from the amount payable to Contractor by the City under this Agreement, a penalty of five dollars ($5.00) for each person for each calendar day during which such person was discriminated against or intimidated in violation of the provisions of the Agreement; and That this Agreement may be canceled or terminated by the City and all money due or to become due hereunder may be forfeited, for a second or any subsequent violation of the terms or conditions of this section of the Agreement. C. Violation of the terms or conditions of this Agreement relating to discrimination or intimidation shall be considered a material breach of this Agreement. SECTION X. RELEASE OF LIABILITY Contractor hereby agrees to release and hold harmless the City and all officers, employees, or agents of the same from all liability which may arise in the course of Contractor's performance of its obligations pursuant to this Agreement. SECTION XI. MISCELLANEOUS This Agreement is personal to the parties hereto and neither party may assign or delegate any of its rights or obligations hereunder without the prior written consent of the other party. Any such delegation or assignment, without the prior written consent of the other party, shall be null and void. This Agreement shall be controlled by and interpreted according to Indiana law and shall be binding upon the parties, their successors and assigns. This document constitutes the entire 4 1 Pa Agreement between the parties, although it may be altered or amended in whole or in part at any time by filing with the Agreement a written instrument setting forth such changes signed by both parties. By executing this Agreement the parties agree that this document supersedes any previous discussion, negotiation, or conversation relating to the subject matter contained herein. This Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. The parties hereto submit to jurisdiction of the courts of Wayne County, Indiana, and any suit arising out of this Contract must be filed in said courts. The parties specifically agree that no arbitration or mediation shall be required prior to the commencement of legal proceedings in said Courts. By executing this Agreement, Contractor is estopped from bringing suit or any other action in any alternative forum, venue, or in front of any other tribunal, court, or administrative body other than the Circuit or Superior Courts of Wayne County, Indiana, regardless of any right Contractor may have to bring such suit in front of other tribunals or in other venues. Any person executing this Contract in a representative capacity hereby warrants that he/she has been duly authorized by his or her principal to execute this Contract. In the event of any breach of this Agreement by Contractor, and in addition to any other damages or. remedies, Contractor shall be liable for all costs incurred by City in its efforts to enforce this Agreement, including but not limited to, City's reasonable attorney's fees. In the event that an ambiguity, question of intent, or a need for interpretation of this Agreement arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement at R. hmond, Indiana, as of the day and year first written above, although signatures may be affixed or different dates. "CITY" The City of Richmond, Indiana, by and through its Board of ni ryCommissioners Sue Miller, President Dated: APPROVED: US H.J. Umftug4& ,�ssociateY, LLP. By: I' y v (Printed): S,\ Title: ,�(��V�r�►w� Dated: ..David M. , Ma Dated: 5 1 Pane H. J. Umbaugh & Associates Certified Public Accountants, LLP 8365 Keystone Crossing Suite 300 Indianapolis, IN 46240-2687 Phone:317-455.1500 Fax 317.465-1550 wwmumbaugh.com Ms, Sandra Spencer, Controller City of Richmond 50 North 5°i Street Richmond, Indiana 47374-4203 May 10, 2016 RE: Richmond (Indiana) Sanitary District Annual Financial Assurance Test —New Paris Landfill Dear Sandra: This letter confirms our understanding of the agreed -upon procedures we will provide to the Richmond (Indiana) Sanitary District (the "District") in regards to the financial test required by 3291AC 10-39-2. We will apply the agreed -upon procedures which are listed in the attached schedule. We will submit a report listing the procedures performed and our findings. This report is intended solely for the use of the District, regarding the above -described financial tests, and should not be used by those who did not agree to the procedures and take responsibility for the sufficiency of the procedures for their purposes. Our report will contain a paragraph indicating that we did not perform an examination and that had we performed additional procedures, other matters might have come to our attention that would have been reported to you. Our engagement to apply agreed -upon procedures (as listed in the attachment) will be conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we obtain your concurrence and the concurrence of all parties to whom we address our report as to the sufficiency of the procedures. We appreciate the opportunity to assist you and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let me know. If you agree with the terms of our engagement as described in this letter (including the procedures enumerated), please sign this letter and return to us for our files. Very ruly yours, MB UGH Jo I M. Seever JMS/tdg Enclosure: Agreed -Upon Procedures RESPONSE: This letter correctly sets forth the understanding of the City of Richmond, Indiana. Title: Date: Exhibit A RICHMOND (INDIANA) SANITARY DISTRICT AGREED -UPON PROCEDURES Compliance With 329IAC 10-39-2 The procedures to be performed are summarized below: (1) Confirm Bond ratings on all outstanding debt of the City of Richmond, Indiana (the "City"), if any. (2) Calculate ratio of City's cash and marketable securities compared to total expenditures. (3) Calculate ratio of anneal debt service of the City compared to total expenditures. (4) Determine basis of accounting for which the City follows. (5) Confirm the City has not defaulted on any of its outstanding General Obligation Bonds. (6) Calculate the City's annual operating surplus/deficit for the most recent three fiscal years. (7) Calculate the City's ability to financially assure costs for closure, post closure, and corrective action costs related to the New Paris Landfill. (8) Prepare a report of findings to the District. Exhibit A Senior Partners / Principals Partners / Principals Managers Accountants/Financial Analysts Paraprofessional Staff Rees Standard Hourly Rates by Job Classification 01/01/2015 $300.00 to $550.00 $220.00 to $400.00 $175.00 to $325.00 $95.00 to $250,00 $85.00 to $175.00 Support Personnel $75.00 to $120.00 • Billing rates are subject to change periodically due to changing requirements and economic conditions. Actual fees will be based upon experience of the stg8"assigned and the complexity of the engagement. The above fees shall include all expenses incurred by the Firm with the exception of expenses incurred for travel, if any, outside the State of Indiana. No such expenses will be incurred without the prior authorization of the Client, The fees do not include the charges of other entities such as rating agencies, bond and official statement printers, couriers, newspapers, bond insurance companies, bond counsel and local counsel, and electronic bidding services, including Parity®. Coordination of the printing and distribution of Official Statements or any other Offering Document are to be reimbursed by the Client based upon the time and expense for such services. Exhibit 6 May 31, 2016 Ms. Sandra Spencer, Controller City of Richmond 50 North 51h Street Richmond, IN 47374-4203 Re: Agreement for Annual Financial Assurance Test — New Paris Landfill Dear Ms. Spencer: You have requested that H.J. Umbaugh & Associates, Certified Public Accountants, LLP (the "Firm") provide to the Richmond Sanitary District (the "Client") those services more fully set forth in Exhibit A hereto (the "Services"), Fees and Costs Fees charged for work performed are generally based on hourly rates, as set forth in Exhibit B, for the time expended, a fixed amount or other arrangement as mutually agreed upon as more appropriate for a particular matter, Hourly rates for work performed by our professionals vary by individual and reflect the complexity of the engagement. Disclosure of Conflicts of Interest with Various Forms of Compensation The Municipal Securities Rulemaking Board (MSRB) is expected to require us, as your municipal advisor, to provide written disclosure to you about the actual or potential conflicts of interest presented by various forms of compensation. Exhibit C sets forth the potential conflicts of interest associated with various forms of compensation. By signing this letter of engagement, the signee acknowledges that he/she has received Exhibit C and that he/she has been given the opportunity to raise questions and discuss the matters contained within the exhibit with the municipal advisor. Billing Procedures Normally, you will receive a monthly statement showing fees and costs incurred in the prior month. Occasionally, we may bill on a less frequent basis if the time involved in the prior month was minimal or if arrangements are made for the payment of fees from bond proceeds. The account balance is due and payable on receipt of the statement and we reserve the right to charge 1% interest per month for outstanding unpaid balances over thirty (30) days from the date of billing. Once our representation has been concluded or terminated, a final billing will be sent to you. If requested to provide an estimate of our fees for a given matter, we will endeavor in good faith to provide our best estimate, but unless there is a mutual agreement to a fixed fee, the actual fees incurred on any project may be less than or exceed the estimate. Any questions or errors in any fee statement should be brought to our attention in writing within sixty (60) days of the billing date. Termination Both the Client and the Firm have the right to terminate the engagement at any time after reasonable advance written notice. On termination, all fees and charges incurred prior to termination shall be paid promptly. Ms. Sandra Spencer, Controller City of Richmond Re: Agreement for Annual Financial Assurance Test — New Paris Landfill May 31, 2016 Page 2 Accountants' Opinion In performing our engagement, we will be relying on the accuracy and reliability of information provided by Client personnel. We will not audit, review, or examine the information. Please also note that our engagement cannot be relied on to disclose errors, fraud, or other illegal acts that may exist. However, we will inform you of any material errors and any evidence or information that comes to our attention during the performance of our procedures that fraud may have occurred. In addition, we will report to you any evidence or information that comes to our attention during the performance of our procedures regarding illegal acts that may have occurred, unless they are clearly inconsequential. We have no responsibility to identify and communicate significant deficiencies or material weaknesses in your internal control as part of this engagement. The responsibility for auditing the records of the Client rests with the Indiana State Board of Accounts and the work performed by the Firm shall not include an audit or review of the records or the expression of an opinion on financial data. Client Responsibilities It is understood that the Firm will serve in an advisory capacity with the Client. The Client is responsible for management decisions and functions, and for designating an individual with suitable skill, knowledge or experience to oversee the services we provide. The Client is responsible for evaluating adequacy and results of the services performed and accepting responsibility for such services. The Client is responsible for establishing and maintaining internal controls, including monitoring ongoing activities. Additional Services Exhibit A sets forth the scope of the Services to be provided by the Firm. From time to time, additional services may be requested by the Client beyond the scope of Exhibit A. The Firm may provide these additional services and be paid at the Firm's customary fees and costs for such services. In the alternative, the Firm and the Client may complete a revised and supplemented Exhibit A to set forth the additional services (including revised fees and costs, as needed) to be provided. In either event, the terms and conditions of this letter shall remain in effect. E-VerifyProgram The Firm participates in the E-Verify program. For the purpose of this paragraph, the E-Verify program means the electronic verification of the work authorization program of the Illegal Immigration Reform and Immigration Responsibility Act of 1996 (P.L. 104-208), Division C, Title IV, s.401(a), as amended, operated by the United States Department of Homeland Security or a successor work authorization program designated by the United States Department of Homeland Security or other federal agency authorized to verify the work authorization status of newly hired employees under the Immigration Reform and Control Act of 1986 (P.L. 99-603). The Firm does not employ any "unauthorized aliens" as that term is defined in 8 U.S.C. 1324a(h)(3). Investments The Firm certifies that pursuant to Indiana Code 5-22-16.5 et seq. the Firm is not now engaged in investment activities in Iran. The Firm understands that providing a false certification could result in the fines, penalties, and civil action listed in I.C. 5-22-16.5-14. Ms. Sandra Spencer, Controller City of Richmond Re: Agreement for Annual Financial Assurance Test —New Paris Landfill May 31, 2016 Page 3 Municipal Advisor Registration The Firm is a Municipal Advisor registered with the Securities and Exchange Commission and the Municipal Securities Rulemaking Board. As such, the Firm is providing certain specific municipal advisory services to the Client. The Firm is neither a placement agent to the Client nor a broker/dealer. The offer and sale of any Bonds shall be made by the Client, in the sole discretion of the Client, and under its control and supervision. The Client agrees that the Firm does not undertake to sell or attempt to sell the Bonds, and will take no part in the sale thereof. Other Financial Industry Activities and Affiliations Umbaugh Cash Advisory Services, LLC ("UCAS") is a wholly -owned subsidiary of the Firm. UCAS is registered as an investment adviser with the Securities and Exchange Commission under the federal Investment Advisers Act. UCAS provides non -discretionary investment advice with the purpose of helping clients create and maintain a disciplined approach to investing their funds prudently and effectively. UCAS may provide advisory services to the clients of the Firm. UCAS has no other activities or arrangements that are material to its advisory business or its clients with a related person who is a broker -dealer, an investment company, other investment adviser or financial planner, bank, law firm or other financial entity. If the foregoing accurately represents the basis upon which we may provide Services to the Client, we ask that you execute this letter, in the space provided below setting forth your agreement. Execution of this letter can be performed in counterparts each of which will be deemed an original and all of which together will constitute the same document. If you have any questions, please let us know. Very truly yours, H.J. Umbaugh & Associates Certified Public Accountants, LLP John M. Seever, Partner The undersigned hereby acknowledges and agrees to the foregoing letter of engagement. Richmond Sanitary District Date: By: EXHIBIT A Services Provided Scope of Services Article I Preliminary Financial Planning Gather historical financial information for the City of Richmond for the two to three prior years, including the landfill operations. Also obtain copies of State Board of Accounts Audits and any available bond rating reports for the City and landfill; obtain copies of ordinances and/or resolutions dealing with the landfill operations in regard to rates and charges for revenue generation, including but not limited to, tipping charges and copies of any contracts with private haulers, as well as any other miscellaneous revenue sources. Obtain budgets for the City landfill for 2015 and beyond for operational expenses and capital improvements. Discuss with landfill operator and engineer the useful life of landfill cells currently utilized and the timing of closure activity. Obtain information from City representatives, landfill operator, and/or consulting engineers in terms of estimated capital and operating costs for closure and post -closure activities. Gather any other relevant information required to address the Financial Assurance Test requirements as outlined in the Administrative Code. Article H Financial Plan and Financial Assurance Test Development Utilizing the historical and prospective financial and operational data gathered from representatives of the City of Richmond, develop pro forma cash flow analysis for the landfill that would include the anticipated closure and post -closure activities. In this regard, summarize the financial information from the City of Richmond and other resources to make the financial calculations and ratios as required by the Administrative Code to meet Financial Assurance Test requirements. Meet the City of Richmond representatives to review the reports and answer any questions. Article III Approval of Financial Assurance Test and submission to IDEM Finalize reports in regard to the operations of the landfill and the Financial Assurance Test requirements for submission to the City of Richmond to be utilized by the City in execution of the Financial Assurance Test and submission to IDEM. EXHIBIT B Fees The Firm's fees for services set forth in Exhibit A shall be billed at the Firm's standard billing rates based upon the actual time and expenses incurred and will not exceed Five Thousand Five Hundred Dollars ($5,500) without further authorization from the Client. Standard Hourly Rates by Job Classification O1/01/2015 Senior Partners / Principals $300.00 to $550.00 Partners / Principals $220.00 to $400.00 Managers $175.00 to $325.00 Accountants/Financial Analysts $95.00 to $250.00 Paraprofessional Staff $85.00 to $175.00 Support Personnel $75.00 to $120.00 • Billing rates are subject to change periodically due to changing requirements and economic conditions. Actual fees will be based upon experience of the staff assigned and the complexity of the engagement. The above fees shall include all expenses incurred by the Firm with the exception of expenses incurred for travel, if any, outside the State of Indiana. No such expenses will be incurred without the prior authorization of the Client. The fees do not include the charges of other entities such as rating agencies, bond and official statement printers, couriers, newspapers, bond insurance companies, bond counsel and local counsel, and electronic bidding services, including Parity®. Coordination of the printing and distribution of Official Statements or any other Offering Document are to be reimbursed by the Client based upon the time and expense for such services. EXHIBIT C Disclosure of Conflicts of Interest with Various Forms of Compensation The forms of compensation for municipal advisors vary according to the nature of the engagement and requirements of the client, among other factors. Various forms of compensation present actual or potential conflicts of interest because they may create an incentive for an advisor to recommend one course of action over another if it is more beneficial to the advisor to do so. This exhibit discusses various forms of compensation and the timing of payments to the advisors. Fixed fee. Under a fixed fee form of compensation, the municipal advisor is paid a fixed amount established at the outset of the transaction. The amount is usually based upon an analysis by the client and the advisor of, among other things, the expected duration and complexity of the transaction and the agreed -upon scope of work that the advisor will perform. This form of compensation presents a potential conflict of interest because, if the transaction requires more work than originally contemplated, the advisor may suffer a loss. Thus, the advisor may recommend less time-consuming alternatives, or fail to do a thorough analysis of alternatives. There may be additional conflicts of interest if the municipal advisor's fee is contingent upon the successful completion of a financing, as described below. Hourly fee. Under an hourly fee form of compensation, the municipal advisor is paid an amount equal to the number of hours worked by the advisor times an agreed -upon hourly billing rate. This form of compensation presents a potential conflict of interest if the client and the advisor do not agree on a reasonable maximum amount at the outset of the engagement, because the advisor does not have a financial incentive to recommend alternatives that would result in fewer hours worked. In some cases, an hourly fee may be applied against a retainer (e.g., a retainer payable monthly), in which case it is payable whether or not a financing closes. Alternatively, it may be contingent upon the successful completion of a financing, in which case there may be additional conflicts of interest, as described below, Fee contingent upon the completion of a financing or other transaction. Under a contingent fee form of compensation, payment of an advisor's fee is dependent upon the successful completion of a financing or other transaction. This form of compensation presents a conflict because the advisor may have an incentive to recommend unnecessary financings or financings that are disadvantageous to the client. For example, when facts or circumstances arise that could cause the financing or other transaction to be delayed or fail to close, an advisor may have an incentive to discourage a full consideration of such facts and circumstances, or to discourage consideration of alternatives that may result in the cancellation of the financing or other transaction. Fee paid under a retainer agreement_._ Under a retainer agreement, fees are paid to a municipal advisor periodically (e.g., monthly) and are not contingent upon the completion of a financing or other transaction. Fees paid under a retainer agreement may be calculated on a fixed fee basis (e.g., a fixed fee per month regardless of the number of hours worked) or an hourly basis (e.g., a minimum monthly payment, with additional amounts payable if a certain number of hours worked is exceeded). A retainer agreement does not present the conflicts associated with a contingent fee arrangement (described above). Fee based upon principal or notional amount and term of transaction. Under this form of compensation, the municipal advisor's fee is based upon a percentage of the principal amount of an issue of securities (e.g., bonds) or, in the case of a derivative, the present value of or notional amount and term of the derivative. This form of compensation presents a conflict of interest because the advisor may have an incentive to advise the client to increase the size of the securities issue or modify the derivative for the purpose of increasing the advisor's compensation.