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2000-316 O IN CE NO AN ORDINANCE OF THE CITY OF DENTON, TEXAS AUTHORIZING THE CITY MANAGER TO EXECUTE A FIRST AMENDMENT TO THE PROFESSIONAL SERVICES AGREEMENT DATED JANUARY 5, 1999, BY AND BETWEEN THE CITY AND NAVIGANT CONSULTING, INC, FOR FURTHER CONSULTING SERVICES PERTAINING TO ELECTRIC RESTRUCTURING MATTERS AND THE POSSIBLE DIVESTITURE OF THE CITY'S ELECTRIC GENERATION ASSETS, AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR, PROVIDING FOR RETROACTIVE EFFECT OF THE AMENDMENT TO AGREEMENT, AND PROVIDING AN EFFECTIVE DATE WHEREAS, the City Council deems it in the pubhc interest to engage Navlgant Consulting, Inc, Burlington, Massachusetts ("Navlgant"), successor to the Reed Consulting Group to provide further professional eunsultmg services to the City pertaining to the electric restructunng matters and the possible chvestlture of the City's electric generation assets, and WHEREAS, on the 5th day of January, 1999, the City Council passed and approved Ordinance No 99-010, wtueh orchnanee anthonzed the City Manager to execute a Professional Services Agreement ("Agreement") with Reed Consulting Group, a Massachusetts Corporation ("Reed") providing for professional consulting services, and WHEREAS, Navlgant succeeded to and acquired the rights of Reed under the Agreement, with the approval of the City, and has been continuously providing professional services to the City respecting electric restructunng matters as well as the possible divestiture of the City's electric generation assets, and recently, the amounts provided for payment to Navlgant have been exhausted pursuant to the Agreement, and the work of Navlgant, although substantially complete, is not yet complete, and accordingly, the City Council believes that it is necessary and appropriate to continue Navigant's engagement respecting the matters described above for a time, so that the possible divestiture of the City's electric generation assets may be brought to a close, one way or the other Accordingly, the City Council desires to enter into a First Amendment (the "Amendment") to the above Agreement, a copy of which Amendment is attached hereto and incorporated herewith by reference, and WHEREAS, Chapter 2254 of the Texas Government Code, known as the "Professional Services Procurement Act", provides that a City may not select a provider of professional services on the basis of eompetmve bids, but must select the provider on the basis of demonstrated competence and qualifications, and for a fair and reasonable price, and WHEREAS, the professional fees as provided in the Professional Services Agreement are fmr and reasonable, eonsidenng all relevant factors, as well as the magmtude of the project for which Navlgant Consulting Group is being engaged, and said professional fees do not exceed any maximum provided by law for such professional services, and WHI~REAS, the City Courted has provided in the City Budget for the appropriation of funds to be used for the purchase of the professional services, as set forth in the Professional Services Agreement, NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS SECTION 1 That the City Manager ~s hereby authorized to execute a First Amendment to the Professional Services Agreement dated January 5, 1999, by and between the City and Navlgant, fgr professional consulting services pertalmng to elecmc restructuring matters and the possible divestiture of the City's electric generation assets, in substantmlly the form of the First Amendment to Professional Services Agreement attached hereto and incorporated herewith by reference SETI~ That the award of this Agreement is on the basis of the demonstrated competence and quahfieatlons of Navlgant and the ablhty of Navlgant to perform the services needed by the C~ty for a fmr and reasonable pnee ~ That the expenditure of funds as provided in the attached First Amendment to Professional Services Agreement is hereby authorized ~ That the above and foregoing First Amendment to the Professional Services Agreement, dated January $, 1999 as hereby ratified, confirmed, and retroactively approved, and shall be effective from and after January 1, 2000 SECTION $ That except as otherwise provided m Section 4 above, this Ordinance shall become-~edmtely upon its passage and approval EULINE BROCK, MAYOR ATTEST JENNIFER WALTERS, CITY SECRETARY AP~OVED AS TO LEGAL FORM HEKBER~ L PROUTY, CITY ATTORNEY S \Our Doeuments\Ordman¢~s~0\Nav~gant Consulting 1 st Amended PSA DME D~vestlture doe THE STATE OF TEXAS )( COUNTY OF DENTON )( FIRST AMENDMENT TO PROFESSIONAL SERVICES AGREEMENT DATED JANUARY 5, 1999 THIS FIRST AMENDMENT to that cert~un Professional Services Agreement, dated January 5, 1999, heretofore entered ~nto by and between the City of Denton, Texas, a Texas Mun~cipal Corporation, and Reed Consulting Group, a Massachusetts Corporation, ~s made and entered into on this date by the City of Denton, Texas, a Texas mumc~pal corporation, w~th ~ts pnnc~pal offices at 215 East McKlnney Street, Denton, Denton County, Texas 76201 (hereafter called "City"), and Navlgant Consulting, Inc, a Corporation, w~th Its pnnc~pal office at 200 Wheeler Road, Burhngton, Massachusetts, 01803 (hereafter called "Navlgant"), acting herein by and through their respective duly authorized representatives and officers WHEREAS, on ~Ianuary 5, 1999, the C~ty entered into a Professional Services Agreement (hereafter the "Agreement") with Reed Consulting Group, a Massachusetts Corporation (hereafter "Reed") providing for specialized, mtenslve professional services ~nvolved m assisting the City w~th its possible d~vest~ture of ~ts electric generation and related assets, and the C~ty Council passed and approved Ordmance No 99-010 on that date, authonzmg the C~ty Manager to execute, smd Agreement, which, among other things, provided for payment of professional fees and oat-of-pocket expenses to the consultant, m an amount not to exceed $2,025,000, and WHEREAS, thereafter, through this date, Reed Consulting Group, and now, 1ts successor by merger Navlgant Consulting, I_nc, have dlhgently performed extensive and complex professional services for the City, as d~rected by the C~ty, incident to the marketmg, as well as the current re-marketing of the City's electric generation resources (the "Project"), with the focus of the present activity being limited by the C~ty to the sale, dispos~t~on, or other d~vest~ture of the C~ty's Sp,ncer Generation Plant as well as the two hydroelectric generation facthtles situated in Denton County, Texas, owned by the C~ty, and WHEREAS, at the time the Agreement was entered ~nto by the C~ty and Reed Consulting Group m January 1999, neither the C~ty, nor Reed could predict with any certainty the length of t~me the professional engagement would entail, nor could they predict the market reception or reaction to the City's offenng of its electric assets for sale, disposition, or other d~vest~ture The parties, ~a determmmg the not-to-exceed compensation at that t~me could do no more than make a coordinated, reasonably Informed, good-faith estimate about the hkely period of time and the quantum,ofprofesslonal services needed to complete the engagement, and WHEREAS, by the close of 1999, the Project was not yet complete, but the funds prowded for m the Agreement for the payment of professional fees to Reed, then to Nawgant Consulting, Inc were nearly exhausted, and shortly thereafter, the City authorized Navigant to move forward w~th a re-marketing effort m hopes of max~m~zmg the financml effects to the C~ty of a possible sale, d~sposlt~on, or d~vest~ture of its local electric generation assets, by addit~onal efforts to be made by Navigant with the remaining bidders, and at that time Navlgant, in order to continue the Project, orally agreed with Cxty Staff, in pnnciple, that because of where the Project stood, that Navlgant would voluntarily restructure its compensation under the Agreement and any future amendment to the Agreement to be entered into by and between the City and Navlgant, effective as of January 1, 2000, in order to continue on the Project without interruption, in order to contmn the City's out-of-pocket costs, in order to take into account a slightly lesser amount of work then being performed on the Project, as well as to bear some risk of loss of its professional fees on the Project in the event that the City was not successful m selling, disposing of, or divesting its local electric generation assets, and the City and Navlgant recognize that, as the properties being marketed by Navlgant involve real property interests, an acceptable way to restructure a portion of Navlgant's fee for professional services is to provide for an additional, fixed completion fee which is payable to Navlgant solely in the event that there is a successful closing and funding of the sale, disposition, or divestiture of the Spencer event ' O Generation Plant (with or without the City s tw hydroelectric generation units), which would satisfy the contingency, and WHEREAS, the City and Navlgant, intend by this First Amendment to Professional Services Agreement, Dated January $, 1999 (hereafter the "First Amendment") to provide for their respective rights and responslblhtles, each to the other, effective from and after January 1, 2000, until such time as the Project is completed, whether by a successful closing and funding of a sale of the City's local electric generation assets, or by a cancellation of the Project, NOW, THEREFORE, the City of Denton, Texas and Navlgant Consulting, Inc (hereafter collectively referred to as the "Parties"), in consideration of their mutual promises and covenants, as well as for other good and valuable considerations, do hereby AGREE to the following amendments to the terms and conditions of the Agreement dated January 5, 1999, to wit I INCORPORATION OF pREAMBLE The parties agree that the preamble set forth herelnabove is hereby incorporated into this First Amendment by reference for all purposes pertinent II CHANGE OF CONSULTANT'S NAME AND BINDING EFFECT The parties agree that Navigant Consulting, Ine shall be the responsible entity respecting the performance of the terms and provisions of the Agreement as well as to this First Amendment, and that Navlgant shall succeed to the rights of Reed under the Agreement for all purposes The parties stipulate that Reed was merged into Navlgant, and that Navigant, for purposes of the performance of the Agreement, is the corporate successor to Reed, which nominal change of name the City expressly consents to and hereby ratifies Page 2 III FEES FOR SERVICES AND PAYMENT OF EXPENSES The parties agree that the provisions of Article II of the Agreement, together with the appheable provisions of the "Attachment to Professional Services Agreement Between Reed Consulting Group and the City of Denton, Texas Dated January 5, 1999" (hereafter the "Attachment") shall be amended as follows 1 The total "not-to-exceed" amount for professional fees and direct out-of-pocket expenses incurred on the Project shall not exceed $2,425,000 2 The City shall continue to reimburse Navlgant for Navigant's direct out-of-pocket expenses reasonably incurred in the Project on a billed monthly basis, at Nawgant's direct cost 3 The ftat monthly fee of $150,000 per month for the duration of the engagement, shall be mochfied, effective as of January 1, 2000 as follows 4 The City shall pay Navigant a fiat monthly fee of $25,000 for professional services rendered on the Project for the month of January 2000, then 5 The City shall pay Navigant a fiat monthly fee of $20,000 for professional services rendered on the Project for the month of February 2000, and for each successive month thereafter, until such time as the City executes and delivers to a purchaser of the Spencer Generation Plant (with or without the City's two hydroelectric generation units) a definitive asset purchase agreement, then the parties agree that the $20,000 fiat monthly fee provided for by this subparagraph shall be prorated on a daily basis, to be calculated effective as of the date at which the definitive asset purchase agreement as executed and delivered by the City to such purchaser, then 6 In the event that the City executes and delivers a definitive asset purchase agreement providing for the sale or disposition of the Spencer Generation Plant (with or without the City's two hydroelectric generation units), then thereafter, the City shall pay Navlgant, until the Project, and this engagement is closed, its professional fees on an as-needed, billed monthly, hourly fee basis, in such hourly amounts as are set forth m the "Standard Hourly Bllhng Rate Schedule (effective January 1, 2000)," attached hereto as Exhibit "l", and incorporated herewith by reference 7 In the event that the Project is not complete, and this engagement is not closed by January l, 2001, and Navlgant is rendenng professional services to the City at that time, then Navlgant may notify the City in writing that it elects to increase its hourly bflhng rates for its staff performing services on the project, effective as of January 1, 2001, to its standard hourly billing rates and the City shall accordingly pay Navlgant m accordance with such increased rates Page 3 8 In the event that the Caty as unable to successfully close and fund a successful sale, dlspos~taon, or other d~vestature of ats Spencer Generataon Plant (wah or without the Ctty's two hydroelectric generatton umts) wathan the twelve (12) months tmmedaately followtng the date of the executaon and dehvery of a defimtave asset purchase agreement (as referred to heremabove), then, in that event the only sums owed by the City to Navtgant for professtonal fees pursuant to the Agreement and the Ftrst Amendment, from and after January 1, 2000, shall be those earned flat monthly fees as provtded for tn paragraphs III C 1 and III C 2 above, and any as-needed, hourly fees earned by Nav~gant, as provided for in paragraphs 1II C 3 and III C 4 above 9 In the event that the C~ty ~s successful, and ~s able to close and fund a sale, dtsposttlon, or dtvestature of the Spencer Generataon Plant (with or without the Caty's two hydroelectric generatton units), within the twelve (12) months immediately followmg the date of the executton and delivery of a definmve asset purchase agreement (as referred to above), then, tn that event only, pursuant to the agreement of the partaes promdtng for the restructunng of Navigant's professtonal fees for the period of time on and after January 1, 2000, the C~ty shall pay to Navlgant, w~thtn twenty days followtng closmg and fundtng of the referenced sale, dtsposatton, or other d~vest~ture of the Spencer Generation Plant (wath or without the Caty's two hydroelectric umts) an addtttonal fixed completion fee of $250,000, for Nawgant's professtonal servmes prevtously rendered, earned, but deferred untd the successful completaon of the contingency described tn this subparagraph IV NOTICES The parttes agree that the terms and provasaons of Artmle IX of the Agreement shall be amended to provtde the followtng as the applicable nottce addresses of the parties, to wit NAVIGANT CITY Navlgant Consulttng, Inc Ctty of Denton, Texas James M Coyne, Managtng Dtrector Mtchael W Jez, C~ty Manager 200 Wheeler Road 215 East Mclrdnney Street Burlington, MA 91803 Denton, TX 76201 V COORDINATION OF WORK ON THE ENGAGEMENT The part~es agree that the terms and provisions of Article XVIII of the Agreement shall be amended to add the followtng provtston D The parties agree that the pnnctpal members of the Project Team are, and shall be James M Coyne and Prescott Hartshorne Other Namgant consultants wall continue to be utdlzed on the Project on an as-needed basas as determined by the Pnncipals The pnnctpal members of the Project Team will remain acttve on the Prolect until ats completaon Over the Page 4 course of completing this engagement, should pnnc~pal members of the Project Team move to a new entity, unless Navigant arranges for continued services from the pnnc~pal members of the Project Team (subcontracted or otherwise), the City reserves the right to have the Agreement and th~s First Amendment follow the Project Team to the new entity where the pnnmpals wdl be employed In that event, payment for services due to Navlgant under the Agreement and the First Amendment will be limited to the flat monthly fees and as-needed hourly professional fees rendered through the date the Project Is transferred to the Pnnclpals' new entity If, however, the Project has progressed to an executed asset purchase agreement for the Spencer Generation Plant, Nav~gant shall be entitled to one-half the fixed completion fee if the financial closing ~s achaeved VI SURVIVAL OF AGREEMENT The parties agree, that except as specffically provided by th~s F~rst Amendment document, that all of the terms, covenants, condmons, agreements, rights, responslbthtles, and obligations of the part, es set forth in the Agreement, shall remain in full force and effect IN WITNESS WHEREOF, the C~ty of Denton, Texas and Nawgant Consulting, Inc have executed First Amendment to Professional Service Agreement Dated January 5, 1999 in four (4) original count~ ,e~arts, by and thro.~ugh t..t. th~hh~r ~e~spfict~ve duly authorized representatives and officers on this the ~ day of ~?~ ,2000 "CITY" CITY OF DENTON, TEXAS A Texas Municipal Corporation Mlche~ae~W~ Je~lt~Manager ATTEST JENNIFER WALTERS, CITY SECRETARY By ~// ~ - APPROVED AS TO LEGAL FORM HERBERT L PROUTY, CITY ATTORNEY Page 5 "NAVIGANT" NAVIGANT CONSULTING, INC A Corporation Coyne, Managing D~rector ~_~ ATTEST By Page 6 Nav :ant: CONSULTING, INC NAVIGANT CONSULTING, INC. Financial Services Standard Hourly Billing Rate Schedule (effective January 1, 2000) Executive Managing Director $400 Semor Managing Director $325 $325 Managing Director $300 Director $250 Principal $225 Senior Engagement Manager $200 Senior Consultant $150 Consultant $125 Associate $100 Technical Writer $100 Research L~brarian $100 Analyst $45 Administrat~ve Assistant $25 Clerical Assistant Preparation for testimony and testimony may be balled at one and one-half times the regular billing rates on th~s schedule