4.5 SR 03-04-2024
Request for Action
To Item Number
Mayor and City Council 4.5
Agenda Section Meeting Date Prepared by
Consent March 4, 2024 Cal Portner, City Administrator
Item Description Reviewed by
Master Service Agreement: Municipal Advisory
Engagement
Reviewed by
Action Requested
Approve, by motion, the Master Service Agreement with Baker Tilly for Municipal Advisory Engagement.
Background/Discussion
The City of Elk River has contracted with Baker Tilly (formerly Springsted) for general municipal financial
advisory work, securities issuance, continuing disclosure, and arbitrage compliance since 2013. Baker Tilly sent
out new Master Service Agreements with updated fees to many clients last year. Our last contract with them is
dated June 27, 2019, when Baker Tilly acquired Springsted. We have not had our fees adjusted since 2016. With
the long lag of time and with inflation they felt it was time to do so; therefore, they began implementing these
new fees in 2023.
Following is a summary of the changes:
Price increases for bond issuances vs current contract averages a 25% increase.
Eliminates recalculation of MA fee when Par is reduced on sale day due to premium.
Increased pricing transparency.
Non ad valorem and advance refunding goes from 1.25 x fee to 1.35 x fee.
Referenda debt changed from 1.10 x fee to 1.25 x fee.
Added 30-day notice in advance of fee changes (current contract didn’t allow us to change fees without
modified contract).
Hourly rates increased as per the Standard Hourly Rates table below:
The arbitrage fees compared to prior fees based on the city’s contract for calculations to be done every 5-years;
under the old contract a five-year calculation would be $3,100, the new fee is $4,500.
The Elk River Vision
A welcoming community with revolutionary and spirited resourcefulness, exceptional
service, and community engagement that encourages and inspires prosperity.
Updated: August 2020
They did not make changes to fees for continuing disclosure work.
The new fees related to arbitrage will be implemented on March 1, 2024, and all other fees will be effective April
1, 2024.
Financial Impact
N/A
Mission/Policy/Goal
Elk River Mission Statement
Attachments
Municipal Advisory Engagement Letter and Scope of Services
N:\\Public Bodies\\Agenda Packets\\03-04-2024\\Final\\x4.5 sr Municipal Advisory Engagment Letter.docx
Baker TillyUS, LLP
30 East Seventh Street
Suite 3025
SaintPaul, MN 55101
651-223-3086
bakertilly.com
February 14,2024
City of Elk River, Minnesota
Attn: Mr.CalvinPortner,Administrator
13065 Orono Parkway
Elk River, MN 55330
RE: Engagement LetterAgreement Related to Services
This letter agreement(the Engagement Letter)is to confirm our understanding of the basis upon which Baker
TillyUS, LLP(Baker Tilly) and its affiliates arebeing engaged by the City of Elk River, Minnesota(the Client)
to assist the Client withadvisory services.
Scope, Objectives and Approach
It is anticipated that projects undertakenin accordance with this Engagement Letterwill be at the
request of the Client. The scope of services, additional termsand associated fee for individual
engagements will be contained in a Scope Appendix or Appendices to this Engagement Letter.
Authorization to provideservices will commence upon execution and return of this Engagement Letter
and one or more Appendices.
Management's Responsibilities
It is understood that Baker Tillywill 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 the 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.
The procedures we perform in our engagement will be heavily influenced by the representations that
we receive from Client personnel. Accordingly, false representations could cause material errors to
go undetected. The Client, therefore, agrees that Baker Tilly will have no liabilityin connection with
claims based upon our failure to detect material errors resulting from false representations made to
us by any Client personnel and our failure to provide an acceptable level of service due to those false
representations.
The ability to provide service according to timelines established and at fees indicatedwill rely in part
on receiving timely responsesfrom the Client. The Client will provide information and responses to
deliverables within the timeframes established in a Scope Appendix unless subsequently agreed
otherwise in writing.
The responsibility for auditing the records of the Client rests with the Client’s separately retained
auditorand the work performed by Baker Tilly shall not include an audit or review of the records or the
expression of an opinion on financial data.
City of Elk River, MinnesotaEngagement Letter, dated February 14, 2024Page 1|18
Ownership of Intellectual Property
Unless otherwise stated in a specific Scope Appendix, subject to Baker Tilly’s rights in Baker Tilly’s
Knowledge (as defined below), Client shall own all intellectual property rights in the deliverables
developed under the applicable Scope Appendix or Appendices ("Deliverables"). Notwithstanding the
foregoing, Baker Tillywill maintain all ownership right, title and interest to all Baker Tilly’s Knowledge.
For purposes of this Agreement “Baker Tilly’s Knowledge” means Baker Tilly’s proprietary programs,
modules, products, inventions, designs, data, or other information, including all copyright, patent,
trademark and other intellectual property rights related thereto, that are (1) owned or developed by
Baker Tillyprior to the Effective Date of this Agreementor the applicable Scope Appendix or
Appendices(“Baker Tilly’s Preexisting Knowledge”) (2) developed or obtained by Baker Tilly after the
Effective Date, that are reusable from client to client and project to project, whereClient has not paid
for such development; and (3) extensions, enhancements, or modifications of Baker Tilly’s Preexisting
Knowledge which do not include or incorporate Client’s confidential information. To the extent that any
Baker Tilly Knowledge is incorporated into the Deliverables, Baker Tilly grants to Client a non-
exclusive, paid up, perpetual royalty-free worldwide license to use such Baker Tilly Knowledge in
connection with the Deliverables, and for no other purpose without the prior written consent of Baker
Tilly. Additionally, Baker Tilly may maintain copies ofits work papers for a period of time and for use
in a manner sufficient to satisfy any applicable legal or regulatory requirements for records retention.
The supporting documentation for this engagement, including, but not limited to work papers,is the
property of Baker Tilly and constitutes confidential information. We may have a responsibility to retain
the documentation for a period of time sufficient to satisfy any applicable legal or regulatory
requirements for records retention. If we are required by law, regulation or professional standards to
make certain documentation available to required third parties, the Client hereby authorizes us to do
so.
Timing and Fees
Specific services will commence upon execution and return of aScope Appendix to this Engagement
Letterand our professional fees will be based on the rates outlined in such Scope Appendix.
Payment of professional fees is not contingent upon project completion by Client nor material timing
changes in project completion. Professional fees provided according to the Scope Appendix are due
within 30 days of being invoiced, regardless of project status. If necessary, monthly payment plan
arrangements may be negotiated upon request.
Unless otherwise stated, in addition to the fees described in aScopeAppendix the Clientwill pay all
of Baker Tilly’s reasonable out-of-pocket expenses incurred in connection with theengagement. All
out of pocket costs will be passed through at cost and will be in addition to theprofessionalfee.
Dispute Resolution
Except for disputes related to confidentiality or intellectual property rights, all disputes and
controversies between the parties hereto of every kind and nature arising out of or in connection with
this Engagement Letteror the applicable Scope Appendix or Appendices as to the existence,
construction, validity, interpretation or meaning, performance, nonperformance, enforcement,
operation, breach, continuation, or termination of this Agreement or the applicable Scope Appendix or
Appendices as shall be resolved as set forth in this section using the following procedure: In the
unlikely event that differences concerning the services or fees provided by Baker Tilly should arise
that are not resolved by mutual agreement, both parties agree to attempt in good faith to settle the
dispute by engaging in mediation administered by the American Arbitration Association under its
mediation rules for professional accounting and related services disputes before resorting to litigation
or any other disputeresolution procedure. Each party shall bear their own expenses from mediation
and the fees and expenses of the mediator shall be shared equally by the parties. If the dispute is not
resolved by mediation, then the parties agree to expressly waive trial by jury in any judicial proceeding
involving directly or indirectly, anymatter (whether sounding in tort, contract, or otherwise) in any way
City of Elk River, MinnesotaEngagement Letter, dated February 14, 2024Page 2|18
arising out of, related to, or connected with this Agreement or the applicable Scope Appendix or
Appendices as or the relationship of the parties established hereunder.
Because a breach of any the provisions of this Engagement Letteror the applicable Scope Appendix
or Appendices as concerning confidentiality or intellectual property rights will irreparably harm the non-
breaching party, Client and Baker Tilly agree that if a party breaches any of its obligations thereunder,
the non-breaching party shall, without limiting its other rights or remedies, be entitled to seek equitable
relief (including, but not limited to, injunctive relief) to enforce its rights thereunder, including without
limitation protection of its proprietary rights. The parties agree that the parties need not invoke the
mediation procedures set forth in this section in order to seek injunctive or declaratory relief.
Limitation on Damages
To the extent allowed under applicable law, the aggregate liability (including attorney’s fees and all
other costs) of either party and its present or former partners, principals, agents or employees to the
other party related to the services performed under an applicable Scope Appendix or Appendicesshall
not exceed the fees paid to Baker Tilly under the applicable Scope Appendix or Appendices to which
the claim relates, except to the extent finally determined to have resulted from the gross negligence,
willful misconduct or fraudulent behavior of the at-fault party. Additionally, in no event shall either party
be liable for any lost profits, lost business opportunity, lost data, consequential, special, incidental,
exemplary or punitive damages, delays or interruptions arising out of or related to this Engagement
Letter or the applicable Scope Appendix or Appendices as even if the other party has been advised of
the possibility of such damages.
Each party recognizes and agrees that the warranty disclaimers and liability and remedy limitations in
this Engagement Letter are material bargained for bases of this Engagement Letter and that they have
been taken into account and reflected in determiningthe consideration to be given by each party under
this Engagement Letter and in the decision by each party to enter into this Engagement Letter.
The terms of this section shall apply regardless of the nature of any claim asserted (including, but not
limited to, contract, tort or any form of negligence, whether of you, Baker Tilly or others), but these
terms shall not apply to the extent finally determined to be contrary to the applicable law or regulation.
These terms shall also continue to apply after any termination of this Engagement Letter.
You accept and acknowledge that any legal proceedings arising from or in conjunction with the
services provided under this Engagement Letter must be commenced within twelve (12) months after
the performance of the services for which the action is brought, without consideration as to the time of
discovery of any claim.
Other Matters
E-Verify Program
Baker Tillyparticipates 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). Baker Tillydoes not
employ any “unauthorized aliens”as that term is defined in 8 U.S.C. 1324a(h)(3).
Investments
Baker Tilly certifies that pursuant to I.C. 5-22-16.5 et seq. Baker Tilly is not now engaged in investment
activities in Iran. Baker Tilly understands that providing a false certification could result in the fines,
penalties, and civil action listed in I.C. 5-22-16.5-14.
City of Elk River, MinnesotaEngagement Letter, dated February 14, 2024Page 3 | 18
Non-Discrimination
Pursuant to I.C. §22-9-1-10, Baker Tilly and its subcontractors, if any, shall not discriminate against any
employee or applicant for employment to be employed in the performance of this Engagement Letter, 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, ancestry, or veteran
status. Breach of this covenant may be regarded as a material breach of this Engagement Letter.
Baker Tilly certifies that, except for de minimis and non-systematic violations, it has not violated the
terms of I.C. 24-4.7, I.C. 24-5-12, or I.C. 24-5-14 in the previous three hundred sixty-five (365) days,
even if I.C. 24-4.7 is preempted by federal law, and that Baker Tilly will not violate the terms of I.C. 24-
4.7 for the duration of the Engagement Letter, even if I.C. 24-4.7 is preempted by federal law. Baker
Tilly further certifies that any affiliate or principal of Baker Tilly and any agent actingon behalf of Baker
Tilly or on behalf of any affiliate or principal of Baker Tilly, except for de minimis and non-systematic
violations, has not violated the terms of I.C. 24-4.7 in the previous three hundred sixty-five (365) days,
even if I.C. 24-4.7 is preempted by federal law, and will not violate the terms of I.C. 24-4.7 for the
duration of the Engagement Letter, even if I.C. 24-4.7 is preempted by federal law.
Anti-Nepotism
The Firm is aware of the provisions under I.C. 36-1-21 et seq. with respect to anti-nepotism in
contractual relationships with governmental entities. The Firm is not aware of any relative (as defined
in I.C. 36-1-21-3) of any elected official (as defined in I.C. 36-1-21-2) of the Client who is an owner or
an employee of the Firm.
In the event Baker Tillyis requested by the Client; or required by government regulation, subpoena,
or other legal process to produce our engagement working papers or its personnel as witnesses with
respect to its Services rendered for the Client, so long as Baker Tillyis not a party to the proceeding
in which the information is sought, Client will reimburse Baker Tillyfor its professional time and
expenses, as well as the fees and legal expenses incurred in responding to such a request.
Neither this Engagement Letter, any claim, nor any rights or licenses granted hereunder may be
assigned, delegated, or subcontracted by either party without the ‘written consent of the other party.
Either party may assign and transfer this Engagement Letter to any successor that acquires all or
substantially all of the business or assets of such party by way of merger, consolidation, other business
reorganization, or the sale of interest or assets, provided that the party notifies the other party in writing
of such assignment and the successor agrees in writing to be bound by the terms and conditions of
this Engagement Letter.
In the event that any provision of this Engagement Letter or statement of work contained in a Scope
Appendixhereto is held by a court of competent jurisdiction to be unenforceable because it is invalid
or in conflict with any law of any relevant jurisdiction, the validity of the remaining provisions shall not
be affected, and the rights and obligations of the parties shall be construed and enforced as if the
Engagement Letter or statement of work did not contain the particular provisions held to be
unenforceable. The unenforceable provisions shall be replaced by mutually acceptable provisions
which, being valid, legal and enforceable, come closest to the intention of the parties underlying the
invalid or unenforceable provision. If the Services should become subject to the independence rules
of the U.S. Securities and Exchange Commission with respect to Client, such that any provision of this
Engagement Letterwould impair Baker Tilly’s independence under its rules, such provision(s) shall be
of no effect.
All non-municipal advisory services provided hereunder shall be performed in accordance with the
professional standards of the Baker Tilly affiliate that performs the services and may not create a
fiduciary relationship between the Baker Tilly affiliate and the Client.
City of Elk River, MinnesotaEngagement Letter, dated February 14, 2024Page 4 | 18
Termination
Both the Client and Baker Tilly have the right to terminate this Engagement Letter,or anywork being
done under an individual Scope Appendix at any time after reasonable advance written notice. On
termination, all fees and charges incurred prior to termination shall be paid promptly. Unless otherwise
agreed to by the Client and Baker Tilly, the scope of services provided in a Scope Appendixwill
terminate 60 days after completion of the services in such Appendix.
Important Disclosures
Incorporated as Attachment A and part of this Engagement Letterare important disclosures. These
include disclosures that apply generally and those that are applicable in the event Baker Tilly is
engaged to provide municipal advisory services.
This Engagement Letter, including the attached Disclosures as updated from time to time,comprisesthe
complete and exclusive statement of the agreement between the parties, superseding all proposals, oral or
written, and all other communications between the parties.Both parties acknowledge that work performed
pursuant to the Engagement Letter will be done through Scope Appendices executed and made a part of
this document.
Any rights and duties of the parties that by their nature extend beyond the expiration or termination of this
Engagement Letter shall survive the expiration or termination of this Engagement Letter or any statement
of work contained in a Scope Appendixhereto.
If thisEngagement Letteris acceptable, please sign below and return one copy to us for our files.
Sincerely,
Elizabeth Bergman, Principal
Signature Section:
The terms as set forth in this Engagement Letterare agreed toon behalf of the Clientby:
Name:_______________________________
Title: _______________________________
Date: _______________________________
City of Elk River, MinnesotaEngagement Letter, dated February 14, 2024Page 5|18
Attachment A
Important Disclosures
Non-Exclusive Services
Client acknowledges and agrees that Baker Tilly and its affiliates, including but not limited to Baker Tilly
US, LLP, Baker Tilly Municipal Advisors, LLC, Baker Tilly Capital, LLC, and Baker Tilly Wealth
Management, LLC, is free to render municipal advisory and other services to the Client or others and that
Baker Tilly does not make its services available exclusively to the Client.
Affiliated Entities
Baker Tilly US, LLP is an independent member of Baker Tilly International. Baker Tilly International
Limited is an English company. Baker Tilly International provides no professional services to clients. Each
member firm is a separate and independent legal entity and each describes itself as such. Baker Tilly US,
LLP is not Baker Tilly International’s agent and does not have the authority to bind Baker Tilly International
or act on Baker Tilly International’s behalf. None of Baker Tilly International, Baker Tilly US, LLP, nor any
of the other member firms of Baker Tilly International has any liability for each other’s acts or omissions.
The name Baker Tilly and its associated logo is used under license from Baker Tilly International Limited.
Baker Tilly Wealth Management, LLC (“BTWM”), a U.S. Securities and Exchange Commission (“SEC”)
registered investment adviser, may provide services to the Client in connection with the investment of
proceeds from an issuance of securities. In such instances, services will be provided under a separate
engagement, for an additional fee. Notwithstanding the foregoing, Baker Tilly may act as solicitor for and
recommend the use of BTWM, but the Client shall be under no obligation to retain BTWM or to otherwise
utilize BTWM relative to Client’s investments. The fees paid with respect to investment services are
typically based in part on the size of the issuance proceeds and Baker Tilly may have incentive to
recommend larger financings than would be in the Client’s best interest. Baker Tilly will manage and
mitigate this potential conflict of interest by this disclosure of the affiliated entity’s relationship, a Solicitation
Disclosure Statement when Client retains BTWM’s services.
Baker Tilly Capital, LLC (“BTC”) is a limited service broker-dealer specializing in merger and acquisition,
capital sourcing, project finance and corporate finance advisory services. BTC does not participate in any
municipal offerings advised on by its affiliate Baker Tilly Municipal Advisors. Any services provided to
Client by BTC would be done so under a separate engagement for an additional fee.
Baker Tilly Municipal Advisors (“BTMA”) is registered as a “municipal advisor” pursuant to Section 15B of
the Securities Exchange Act and rules and regulations adopted by the SEC and the Municipal Securities
Rulemaking Board (“MSRB”). As such, BTMA may provide certain specific municipal advisory services to
the Client. BTMA is neither a placement agent to the Client nor a broker/dealer. The offer and sale of any
bonds is made by the Client, in the sole discretion of the Client, and under its control and supervision.
The Client acknowledges that BTMA does not undertake to sell or attempt to sell bonds or other debt
obligations and will not take part in the offer or sale thereof.
Baker Tilly, may provide services to the Client in connection with human resources consulting, including,
but not limited to, executive recruitment, talent management and community survey services. In such
instances, services will be provided under a separate scope of work for an additional fee. Certain
executives of the Client may have been hired after the services of Baker Tilly were utilized and may make
decisions about whether to engage other services of Baker Tilly or its affiliates. Notwithstanding the
foregoing, Baker Tilly may recommend the use of Baker Tilly or a subsidiary, but the Client shall be under
no obligation to retain Baker Tilly or an affiliate or to otherwise utilize either relative to the Client’s activities.
City of Elk River, Minnesota Engagement Letter, dated February 14, 2024 (Attachment A) Page 6 | 18
Conflict Disclosure Applicable to Municipal Advisory Services Provided by BTMA
Legal or Disciplinary Disclosure. BTMA is required to disclose to the SEC information regarding criminal
actions, regulatory actions, investigations, terminations, judgments, liens, civil judicial actions, customer
complaints, arbitrations and civil litigation involving BTMA. Pursuant to MSRB Rule G-42, BTMA is
required to disclose any legal or disciplinary event that is material to the Client’s evaluation of BTMA or
the integrity of its management or advisory personnel.
There are no criminal actions, regulatory actions, investigations, terminations, judgments, liens, civil
judicial actions, customer complaints, arbitrations or civil litigation involving BTMA. Copies of BTMA filings
with the SEC can currently be found by accessing the SEC’s EDGAR system Company Search Page
and
which is currently available at https://www.sec.gov/edgar/searchedgar/companysearch.html
searching for either Baker Tilly Municipal Advisors, LLC or for our CIK number which is 0001616995. The
MSRB has made available on its website (www.msrb.org) a municipal advisory client brochure that
describes the protections that may be provided by MSRB rules and how to file a complaint with the
appropriate regulatory authority.
Contingent Fee. The fees to be paid by the Client to BTMA are or may be based on the size of the
transaction and partially contingent on the successful closing of the transaction. Although this form of
compensation may be customary in the municipal securities market, it presents a conflict because BTMA
may have an incentive to recommend unnecessary financings, larger financings or financings that are
disadvantageous to the Client. For example, when facts or circumstances arise that could cause a
financing or other transaction to be delayed or fail to close, BTMA 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.
Hourly Fee Arrangements. Under an hourly fee form of compensation, BTMA will be paid an amount equal
to the number of hours worked multiplied by an agreed upon billing rate. This form of compensation
presents a potential conflict of interest if BTMA and the Client do not agree on a maximum fee under the
applicable Appendix to this Engagement Letter because BTMA will not have a financial incentive to
recommend alternatives that would result in fewer hours worked. In addition, hourly fees are typically
payable by the Client whether or not the financing transaction closes.
Fixed Fee Arrangements. The fees to be paid by the Client to BTMA may be in a fixed amount established
at the outset of the service. The amount is usually based upon an analysis by the Client and BTMA of,
among other things, the expected duration and complexity of the transaction and the work documented
in the Scope Appendix to be performed by Baker Tilly. This form of compensation presents a potential
conflict of interest because, if the transaction requires more work than originally contemplated, Baker Tilly
may suffer a loss. Thus, Baker Tilly may recommend less time-consuming alternatives, or fail to do a
thorough analysis of alternatives.
BTMA manages and mitigates conflicts related to fees and/or other services provided primarily through
clarity in the fee to be charged and scope of work to be undertaken and by adherence to MSRB Rules including,
but not limited to, the fiduciary duty which it owes to the Client requiring BTMA to put the interests of the
Client ahead of its own and BTMA’s duty to deal fairly with all persons in its municipal advisory activities.
To the extent any additional material conflicts of interest have been identified specific to a scope of work the
conflict will be identified in the respective Scope Appendix. Material conflicts of interest that arise after the date of
a Scope Appendix will be provide to the Client in writing at that time.
City of Elk River, Minnesota Engagement Letter, dated January 24, 2024 (Attachment A) Page 7 | 18
(MSAAppAV20200825)
SCOPE APPENDIX to
Engagement Letter dated: February 14,2024
Between the City of Elk River, Minnesota and
Baker Tilly US, LLP
RE: Municipal Advisory Services - Debt Issuance, Arbitrage, Continuing Disclosure
DATE:February 14,2024
This Scope Appendix is attached by reference to the above-namedengagement letter (the Engagement
Letter) between the City of Elk River, Minnesota(the Client) and Baker Tilly US, LLP and relates to services
to be provided by Baker Tilly Municipal Advisors, LLC.
SCOPE OF WORK
Baker Tilly Municipal Advisors, LLC (BTMA) will perform the following services:
A.General Municipal Advisory Services
Unless otherwise agreed to by the parties, in connection with any request for services relative to any
financial topic, new project concept planning or other financially related topic or project (each referred
to herein as a Project), BTMA shall perform the following services, as applicable:
1.Provide general financial advice relative to a Project.
2.Survey the resources available to determine the financial feasibility of a Project.
3.Assist in the development of a plan including alternative approaches for a particular Project that
may be available and appropriate for such Project.
4.Assist the Client in selecting an approach for a Project.
5.Advise the Client generally on current market conditions, financial impacts of federal, stateor other
laws, and other general information and economic data that might be relevant to a Project.
6.Assist Client, as requested, in identifying other professional services that may be necessary to a
Project.
7.Assist Client in coordinating the activities of the working group for a Project as needed.
8.Assist with the review of documents provided that are relevant to the development of a plan and
alternative approaches for a Project.
9.Assist the Client with other components of a Project as requested and agreed upon.
B.Securities Issuance
Unless otherwise agreed to by the parties, in connection with any request for services relative to any
debt issuance including modifying or refunding of a prior issuance or other financings (each referred to
herein as a “Transaction”), BTMA shall perform the following services, as applicable:
1.Develop a preliminary estimate of project costs and provide a financial feasibility to assist the Client
in its determination of what type of financing is most suitable to meet the needs of the Client for the
particular issuance (“Debt Obligation”).
2.Assist the Client in determination of an appropriate method of sale for the Debt Obligation (e.g.
competitive, negotiated, private placement.)
3.Provide for the Client’s consideration an amount, the security, maturity structure, call provisions,
estimated pricing, and other terms and conditions of the Debt Obligation.
4.Advise the Client on current market conditions, financial impacts of federal, state or other laws, and
other general information and economic data that might normally be expected to influence the
ability to borrow or interest rates of the Debt Obligation.
(Scopev20230309) Page SA - 8 | 18
SCOPE APPENDIX to
Engagement Letter dated: February 14, 2024
Between the City of Elk River, Minnesotaand
Baker Tilly US, LLP
5.Assist the Client in the analysis of advisability of securing a credit rating, and the selection of a
credit rating firm or firms for the Debt Obligation and further assist in the development and
presentation of information to obtain a credit rating or credit ratings for the Debt Obligation.
6.Assist the Client in the analysis of utilizing credit enhancement and provide assistance in seeking
such credit enhancement if such credit enhancements would be advantageous to the Client.
7.Assist Client in coordinating the financing activities between various parties to any Transaction as
needed.
8.Assist Client in identifying other professional services that may be necessary for the issuance or
post-issuance requirements of the Debt Obligation.
9.Assist the Client in connection with the preparation, composition, review and distribution of an
offering document (e.g. Preliminary and Final Official Statement, Offering Circular, Term Sheet, or
Private Placement Memorandum, as applicable) of the type and nature generally prepared in
connection with the sale of municipal securities, which will disclose technical data, information and
schedules relating to the Client, the project and the Debt Obligation.
10.Provide relevant information for and assist with the review of other primary financing documents,
including but not limited to the relevant governing body issuance resolutions/ordinances, bond
purchase agreement, closing documents, and official notice of sale.
11.Communicate with potential underwriters or investors, as appropriate to any Transaction, to ensure
that each is furnished with information the Client has deemed to be material in order to render an
independent, informed purchase or investment decision concerning the Client’s proposed
financing.
12.Facilitate the sale of Debt Obligations through receipt and analysis of bids in a competitive sale or
analysis of pricing and terms offered by an underwriter or purchaser in a negotiated or private
placement sale.
13.Coordinate with the proper parties to ensure the efficient delivery of the Debt Obligations to the
applicable purchaser and receipt of proceeds.
C.Arbitrage Monitoring Services
BTMA shall, based on information supplied by Client, make arbitrage calculations (to include for
purposes of this document, rebate and yield reduction calculations) required by Section148 of the
Internal Revenue Service (IRS) Code and related U.S. Treasury regulations with respect to specified
Debt Obligations for the reporting period designated for any such Debt Obligation. Annually, BTMA
will provide the Client with a listing of the specified Debt Obligations and the reporting period
designated for any such Debt Obligation (an Authorization Listing) to confirm the scope of the
ongoing arbitrage monitoring services. Exhibit A reflects the Authorization Listing as of the date of this
Scope Appendix.
In carrying out its duties, BTMA shall periodically, for each specified Debt Obligation:
1.Determine the arbitrage yield limit on the applicable Debt Obligation;
2.Determine the amount of any arbitrage payment due the IRS while taking into consideration
applicable exceptions;
3.Notify Client and/or its designee of any liability amount;
4.Prepare for submission by Client the form(s) with which to submit any payment amount due to the
IRS at the appropriate intervals throughout the term of the engagement relative to each specified
Debt Obligation.
Page SA-9| 18
(Scopev20230309)
SCOPE APPENDIX to
Engagement Letter dated: February 14, 2024
Between the City of Elk River, Minnesotaand
Baker Tilly US, LLP
Client agrees to timely provide BTMA with accurate information concerning cash and investment
activity within all funds relative to the subject Debt Obligations. The information to be provided shall
include:
1.Deposits and withdrawals of proceeds or money from other sources within any funds subject to the
IRS arbitrage rules;
2.Payments of principal and interest on the Debt Obligations; and
3.All investment activity including:
a.Date of purchase or acquisition;
b.Purchase price of investments including any accrued interest;
c.Face amount and maturity date;
d.Stated rate of interest;
e.Interest payment dates;
f.Date of sale, transfer, or other disposition;
g.Sale or disposition price; and
h.Accrued interest due on the date of sale or disposition.
4.The Client will provide copies of Debt Obligation offering or legal documents, including, but not
limited to, the official statement, the information return filed upon issuance (Form 8038 or 8038-G),
thearbitrage certificate, verification report and the bond ordinance/trust indenture.
5.Any other information necessary for BTMA to make the calculations required for the specified Debt
Obligation.
The Client is responsible for annually confirming the Authorization Listing and for notifying BTMA of
any of the following:
>additional or subsequent Debt Obligations that would require arbitrage monitoring services;
>redemptions/refundingsof Debt Obligations that would affect the reporting period designated in
the most recent Authorization Listing.
Our engagement will not include verifying that: proceeds were used for purpose expenditures;
investments were purchased at market price; no amounts were paid to any party in order to reduce the
yield on any investment; the Debt Obligation was appropriatelystructured or qualified as a tax-exempt
offering; or information provided to us is complete and accurate.
During the performance of these procedures, it may become necessary for us to consult with your bond
counsel and/or obtain information from them concerning interpretations of the above information as
affected by applicable sections of the Internal Revenue Code. We will consult with you before any such
action is initiated.
Subsequent changes in official interpretations of the tax law may require or permit revision of
calculations by requiring or permitting a different methodology for the calculation of arbitrage rebate
and yield reduction. We will be under no obligation to update our report for any events occurring, or
data or information coming to our attention, subsequent to the issuance of our report.
Calculation and payment of any arbitrage rebate liability and yield reduction payment due is the
responsibility of the Client. As such, management has the primary responsibility for the arbitrage rebate
and/or yield reduction payment return which the Client may be required to file. You should review the
report and calculations carefully upon receipt.
Page SA-10| 18
(Scopev20230309)
SCOPE APPENDIX to
Engagement Letter dated: February 14, 2024
Between the City of Elk River, Minnesotaand
Baker Tilly US, LLP
D.Continuing Disclosure Services
BTMA will commence continuing disclosureservicesfor debt obligationsas set forth in any continuing
disclosure undertakingfor the debt obligationsthat the Client will execute upon settlement. Annually,
BTMA will check in with the Client to confirm the engagement for the next annual reporting period.
In carrying out its duties, BTMA shall do the following:
1.Preparation and filing of annual reporting.
The Client will provide BTMA with a copy of each executed Continuing Disclosure Undertaking
(CDU) including master and supplemental CDUs if any.
BTMA will:
a.Identify the Client's reporting obligations, compile and prepare, as needed, any necessary
operating data, and file any required annual report and financial statements, including the audit
as provided for in each CDU for the reporting period;
b.Provide to the Municipal Securities Rulemaking Board ("MSRB") through its Electronic
Municipal Market Access System ("EMMA"), the annual information required under each
respective CDU;and
c.Provide additional reporting to purchasers, as set forth in Debt Obligation documents or private
agreements:
2.Assistance filing reportable events on EMMA
Upon notification of one of the events listed as set forth in each CDU (collectively, Reportable
Events), BTMA will assist the Client with filing any Reportable Events. Most Reportable Events are
required by the Rule to be filed within ten business days ofthe occurrenceof such event. Client will
notify BTMA as soon as possible when they believe a reportable event has or may have occurred
to enable BTMA to file a timely notice on EMMA. It is the Client’s sole responsibility to notify BTMA
of the potential occurrence of a Reportable Event.
3.Five-year Compliance Check
At the time any Debt Obligations subject to the Rule are issued, the Client must disclose in its
official statement any instances in the past five years it failed to comply, in all material respects,
with any previous undertakings for Debt Obligations which were subject to the Rule. BTMA will:
a.Compile reporting requirements for any Debt Obligations that were outstanding during the five-
year periodand assess all financial data, operating data, and reportable event filings made for
each applicable debt obligation. If necessary, at the time that BTMA conducts services
annually under Item 1, BTMA will update the five-year compliance check.
b.If a deficiency is found and the debt obligation(s)remain outstanding at the time of BTMA’s
compliance check, BTMA will prepare any necessary reporting or notices to meet the CDU
obligations. BTMA will provide the Client with documentation that the EMMA filing has been
completed.
Client agrees to provide BTMA with the audit and accurate information with respect to compiling the
annual report in a timely manner and to fully disclose to BTMA any Reportable Events as they occur.
Page SA - 11| 18
(Scopev20230309)
SCOPE APPENDIX to
Engagement Letter dated: February 14, 2024
Between the City of Elk River, Minnesotaand
Baker Tilly US, LLP
4.EMMA Issuer Homepage (Upon request. Hourly rates will apply.)
BTMA will assist the Client on the creation of an Issuer Homepage on EMMA where Client and
related entity filings may be shown. The Client will have the option to review the Homepage and
provide additional information related to the Client.
5.Other post issuance services (Upon Request. Hourly rates will apply.)
If requested, BTMA will provide to the Client other post issuance services including, but not limited
to, consultation related to disclosure operating procedures, post issuance policies and procedures,
and debt management.
E.Housing and Economic DevelopmentServices
1.Preparation of preliminary tax increment or tax abatement revenues projections for proposed new
project.Estimation of future values and tax increments for a targeted area. Forecast the projected
tax increment revenues to be generated over the life of the district based on those assumptions.
Estimated range of available revenues based on valuations.
2.Assist Client with establishment of tax increment financing (TIF) district including drafting of TIF
Plan and required notifications, presentations and attendance at workshops and/or public hearings,
etc.
3.Assist Client with the creation of tax abatement, identification of tax abatement properties, drafting
of required notice(s) and supporting documentation, presentations and attendance at workshops
and/or public hearings, etc.
4.Assist Client with incentive portfolio development and potential for availability of financing tools
including review of federal, state, and local tax credits and incentives available.
5.Assist Client with financial needs (But-For) analysis through review of developer information and
determination on the reasonableness of assumptions. In certain cases, suggest alternative
assumptions and provide sensitivity analysis, as necessary.
6.Assist Client with completion of rate of return calculation including Cash-on-Cash Return and
Internal Rate of Return. Assist Client with defining appropriate level of assistance based on
developer’s rates of return comparing developer rate of return to the “market” return for similar
projects, commenting on reasonableness of return considering type of project, current market and
developer at risk equity.
7.Assist Client with negotiating public assistance agreements with developers.
8.Provide financial feasibility review to assist Client with assessment ofthe sufficiency of tax
increment/tax abatement and other available revenues to support total project costs based on
developer-provided total development costs and project assumptions. As necessary, suggest
alternative assumptions and provide sensitivity analysisto assess sufficiency of tax increment or
tax abatement revenues to support costs with considerations for timing of financing needs to
provide financial support. Prepare cash flow analysis based on sensitivity analysis.
9.Provide background developer reviews to assist Client with learning more about prospective
developers by performing in-depth business credit analyses, evaluating market conditions,
assessing proposed business plans, and checking credentials and references.
10.Preparation of tax increment financing (TIF) management program to assist Client with analysis
of existing TIF districts that includes an overview of current district status, preparation of cash flow
analysis, suggestions for ongoing administrative goals, and recommendations for future
opportunities or required compliance items.
Page SA - 12| 18
(Scopev20230309)
SCOPE APPENDIX to
Engagement Letter dated: February 14, 2024
Between the City of Elk River, Minnesotaand
Baker Tilly US, LLP
11.Preparation of annual reports to assist Client with meeting annual compliance requirements and
filing submission deadlines.
12.Assist Client with estimation of economic impacts of proposed developments including cost-benefit
and/or net benefit analysis.
13.Assist Client with other components of a housing and economic development project as requested
and agreed upon.
Page SA-13| 18
(Scopev20230309)
SCOPE APPENDIX to
Engagement Letter dated: February 14, 2024
Between the City of Elk River, Minnesotaand
Baker Tilly US, LLP
COMPENSATION AND INVOICING
A.Compensationfor services relatingto debt obligations
1.FeesforServices
a)Generalobligationdebt:
Additional
Par AmountBase FeePurposes FeeTotal ParTotal Fee
Tier 1 -to 2,999,999.99$ 18,000$ 5,000 Total Par of all purposesBase Fee + $5,000 for each addt'l purpose
Tier 2 3,000,000.00to 4,999,999.99$ 25,000$ 5,000 Total Par of all purposesBase Fee + $5,000 for each addt'l purpose
Tier 3 5,000,000.00to 9,999,999.99$ 30,000$ 7,500 Total Par of all purposesBase Fee + $7,500 for each addt'l purpose
Tier 410,000,000.00to24,999,999.99$ 45,000$ 7,500 Total Par of all purposesBase Fee + $7,500 for each addt'l purpose
Tier 525,000,000.00to49,999,999.99$ 65,000$ 10,000 Total Par of all purposesBase Fee + $10,000 for each addt'l purpose
Tier 650,000,000.00to74,999,999.99$ 75,000$ 10,000 Total Par of all purposesBase Fee + $10,000 for each addt'l purpose
Tier 775,000,000.00to99,999,999.99$ 100,000$ 10,000 Total Par of all purposesBase Fee + $10,000 for each addt'l purpose
b)The foregoing schedule shall apply to the total Par amount as indicated in the Preliminary
Official Statement or Terms of Offering.
c)TheforegoingscheduleshallincludeBTMA'sservicesthroughclosingof a DebtObligation. If
BTMA performs post-closing services relative to a Debt Obligation, it shall be compensated for
such services at the hourly rates set out in Section B herein.
d)Non ad valorem supported debtand advance refundings,shall be compensated at 1.35 times
the fee set out in paragraph 1.a. above.
e)Debt Obligations dependent on successful referenda, including GO sales tax revenue, shallbe
compensated at 1.25 times the fee set out in paragraph 1.a. above.
f)IntheeventitisnecessaryforBTMAtorepeatDebtObligationservicesbecauseofevents
beyond BTMA's control, BTMA shall be compensated for such repetitive services at the hourly
rates set in paragraph B herein. BTMA shall not be entitled to compensation under thissection
forfailedreferendaunlessotherwiseprovidedbyagreementbetweentheClient and BTMA.
g)Fee schedule and billing rates are subject to change periodically due to changing requirements
and economic conditions. Baker Tilly will notify Client thirty (30) days in advance of any change
to fees. If Client does not dispute such change in fees within that thirty (30) day period, Client
will be deemed to have accepted such change. The fees billed will be the fees in place at the
time services are provided. Actual fees will be based upon experience of the staff assigned
and the complexity of the engagement.
h)BTMA'sfeesshallbepayableasfollows:
(1)Exceptasspecifiedelsewhereinthissection,for a DebtObligation,feesaredueupon
closing of the Debt Obligation, except that if the Debt Obligation is awarded but cannot be
closedbyreasonofanerror,actor omissionoftheClient,BTMAshallbepaidtheamount
which it would have been due upon closing.
(2)Ifanissuanceisawardedanddoesnotclosefor a reasonthatisbeyondthecontrolof the
Client and without fault of the Client, then BTMA shall be compensated at one-half the
amount which would have been due upon closing.
(3)If a Client Debt Obligation is abandoned for any reason and BTMA is without fault for such
abandonment, BTMA shall be paid a fee in the amount that would have been due if BTMA's
services to the point of abandonment had been charged at the hourly rate set out in
paragraph B hereinhowevernotmorethanthefeehadtheDebtObligationbeenissued. A
Debt Obligation shall be deemed abandoned upon notice by the Client to BTMA of
abandonmentorwhenevertheClienthastakennoactionwithrespecttotheDebtObligation
for one year, whichever occurs first.Delay in the issuance of Debt Obligations resulting
from failed authorization referenda shall not constitute abandonment unless otherwise
provided by agreement between the Client and BTMA.
(4)Feesforservicesprovidedinconnectionwith a privateplacementarenotcontingenton the
successful placement of the Debt Obligation.
Page SA - 14| 18
(Scopev20230309)
SCOPE APPENDIX to
Engagement Letter dated: February 14, 2024
Between the City of Elk River, Minnesotaand
Baker Tilly US, LLP
The Client shall be responsible for issuance expenses including, without exclusion of other expenses: (i)
posting and distributing the Official Statement, (ii) legal fees, (iii) printing, (iv) delivery and settlement, (v)
travel, (vi) rating fees, (vii) out-of-pocket Debt Obligation related expenses, and (viii) governmental and
governmental agency fees and charges.
2.Compensation and invoicing for arbitrage services
Fees for services set forth in the Scope Appendix will be applied as follows per determination for each
Debt Obligation:
a)Initial determination for a Debt Obligation: $2,500 for the first year, plus $500 for each additional
year up to a five-year period when such determinations are made for periods in excess of one year.
b)Subsequent determination for a Debt Obligation: $1,750 for one year, plus $500 for each additional
year when such determinations are made for periods in excess of one year.
c)Preparation of Form 8038-T: $500
d)If BTMA is required to perform allocations of investments among funds and/or Debt Obligations,
additional compensation will be charged at the standard hourly rates in place at the time services
are provided.
3.Hourly rates for housing/economic development and other pre-debt or non-debt issuance
related services
Standard Hourly Rates by Job Classification
2024
Principal $330
Director$300
Manager$260
Consultant$200
Support, municipal bond disclosure specialist$150
Intern$110
Billing rates are subject to change periodically due to changing requirements and economic conditions.
Baker Tilly will notify Client thirty (30) days in advance of any change to fees. If Client does not dispute
such change in fees within that thirty (30) day period, Client will be deemed to have accepted such change.
The fees billed will be the fees in place at the time services are provided. Actual fees will be based upon
experience of the staff assigned and the complexity of the engagement.
The above hourly fees shall include all expenses incurred by BTMA with the exception ofexpenses incurred
for mileage which will be billed on a separate line item. No such expenses will be incurred without the prior
authorization of the Client. Hourly projects that are active as of the date of this contract, will transition to
the new hourly rates herein on April 1, 2024.
Page SA - 15| 18
(Scopev20230309)
SCOPE APPENDIX to
Engagement Letter dated: February 14, 2024
Between the City of Elk River, Minnesotaand
Baker Tilly US, LLP
4.Compensation for continuing disclosure services
Feesforcontinuingdisclosureservicesincludethefollowing:
a)FullDisclosure - An annual report is required to be prepared by BTMA:
(i)A fee of $1,300.00willbe applied to each separate type of debt report required (i.e., general
obligation, revenue, etc.); plus
(ii) A feeof$200.00per debt obligation.
b)FullDisclosure – The Client’s audited financial statements contain some or all of the required financial
and operating data:
(i)A fee of $600.00; plus
(ii) A feeof$200.00per debt obligation.
c)FullDisclosure – A Final Official Statement previously filed on EMMA can be referenced as containing
all the required financial and operating data:
(i) A feeof$200.00per debt obligation.
d)LimitedDisclosure
(i) A feeof$600.00;plus
(ii) A feeof$200.00per debt obligation.
In addition to the above, Client shall be responsible for any county auditor certificate feesincurred for the
preparation of an annual report.
5.Expenses and Hourly Fees
Amounts due BTMA for expenses and services charged at hourly rates shall not be contingent.
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.
Nonattest Services
As part of this engagement, we will perform certain nonattestservices. For purposes of the Engagement
Letter and this Scope Appendix, nonattest services include services that the Government Auditing
Standards refers to as nonaudit services.
We will not perform any management functions or make management decisions on your behalf with respect
to any nonattest services we provide.
In connection with our performance of any nonattest services, you agree that you will:
Continue to make all management decisions and perform all management functions, including
approving all journal entries and general ledger classifications when they are submitted to you.
Designate an employee with suitable skill, knowledge, and/or experience, preferably within senior
management, to oversee the services we perform.
Evaluate the adequacy and results of the nonattest services we perform.
Accept responsibility for the results of our nonattest services.
Establish and maintain internal controls, including monitoring ongoing activities related to the
nonattest function.
Page SA - 16| 18
(Scopev20230309)
SCOPE APPENDIX to
Engagement Letter dated: February 14, 2024
Between the City of Elk River, Minnesotaand
Baker Tilly US, LLP
Conflicts of Interest
Attachment A to the Engagement Letter contains important disclosure information that is applicable to this
Scope Appendix.
We are unaware of any additional conflicts of interest related to this Scope Appendix that exist at this time.
Termination
Notwithstanding termination provisions contained in the Engagement Letter, this Scope Appendix is
intended to be ongoing and applicable individually to specific services including financings, arbitrage
computations, and/or continuing disclosure engagement, (Sub-engagements) as if they are the sole subject
of the Scope Appendix. As such, termination may occur for a specific Sub-engagement without terminating
the Scope Appendix itself. On termination of a Sub-engagement or the Scope Appendix, all fees and
charges incurred prior to termination shall be paid promptly. Unless otherwise agreed to by the Client and
Baker Tilly, the scope of services provided in a Sub-engagement performed under this Scope Appendix will
terminate 60 days after completion of the services for such Sub-engagement.
If this Scope Appendix is acceptable, please sign below and return one copy to us for our files. We look
forward to working with you on this important project.
Sincerely,
Elizabeth Bergman, Principal
Signature Section:
The services and terms as set forth in this Scope Appendix are agreed to on behalf of the Client by:
Name:_______________________________
Title: _______________________________
Date: _______________________________
Page SA - 17| 18
(Scopev20230309)
SCOPE APPENDIX to
Engagement Letter dated: February 14, 2024
Between the City of Elk River, Minnesotaand
Baker Tilly US, LLP
Exhibit A
Arbitrage Monitoring Services
Authorization to Engage Services (Authorization Listing)
This Authorization Listing is pursuant to the Arbitrage Monitoring Services Scope Appendix (Scope
Appendix) dated February 14, 2024by and between the City of Elk River, Minnesota(Client) and Baker
Tilly Municipal Advisors (BTMA).BTMA will provide the services outlined in the Scope Appendix with
respect to the following Debt Obligation(s) unless written notification is provided to BTMA that the Client
will not require these services within 30 days of receipt of this Authorization Listing:
Bond IssueClosing DateFrequency
$9,685,000 General Obligation Refunding Bonds, Series 2013A (EDA)2/12/20135th Year
$9,755,000 Electric Revenue Bonds, Series 2016A; $1,370,000
7/14/20165th Year
Electric Revenue Refunding Bonds, Series 2016B*
$10,000 ,000 Electric Revenue Bonds, Series 2018A9/26/20185th Year
$32,715,000 General Obligation Sales Tax Revenue Bonds, Series
9/19/20195th Year
2019A
$9,435,000 General Obligation Capital Improvement Plan Bonds,
Series 2020A; $5,340,000 General Obligation Capital Improvement 12/29/20205th Year
Plan Refunding Bonds, Series 2020B*
$4,805,000 General Obligation Capital Improvement Plan and
5/20/20215th Year
Equipment Bonds, Series 2021A
$11,810,000 Electric Revenue Bonds, Series 2021B5/13/20215th Year
$1,615,000 General Obligation Water Utility Revenue Bonds, Series
6/10/20215th Year
2021C
* Single issue and as such, reported on collectively for IRS purposes.
Page SA-18| 18
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