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RESOLUTION (ID # 4540) DOC ID: 4540 A
CITY OF SAN BERNARDINO — REQUEST FOR COUNCIL ACTION
Agreement/Contract Amendment
From: Mark Scott M/CC Meeting Date: 07/18/2016
Prepared by: Tanya Romo, (909) 384-
5122
Dept: City Manager Ward(s): All
Subject:
Resolution of the Mayor and Common Council of the City of San Bernardino Authorizing
the Execution of a Third Amendment to the Consultant Services Agreement with
Management Partners, Inc. Regarding the Bankruptcy Recovery Plan. (#4540)
Current Business Registration Certificate: Yes
Financial Impact:
$400,000 for Fiscal Year 2016/17
Account Number: 001-090-0134-5510
Motion: Adopt the Resolution.
Synopsis of Previous Council Action
November 17, 2014 - Resolution was approved authorizing an agreement for $300,000.
April 20, 2015 - Resolution was approved authorizing the first amendment to the
agreement for $300,000.
August 17, 2015 - Resolution was approved authorizing the second amendment to the
agreement for $600,000.
Background
Management Partners continues to assist the City with developing a plan of adjustment
for filing with the bankruptcy court by managing the City's bankruptcy team. This
amendment is required to enable Management Partners to continue assisting the City
through the Bankruptcy process.
During the remainder of 2016 Management Partners' plan is to completely implement
the Recovery Plan and to assist the City in securing an exit from bankruptcy status
including the completion of the fire annexation project, complete negotiated settlements
with creditors such as the pension obligation bond creditors, and support the bankruptcy
attorney with the Disclosure Statement and related court filings.
Priority will be to fully implement the Recovery Plan, which calls for a number of
initiatives to be completed in 2016.
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Financial Summary
Updated: 7/12/2016 by Jolena E. Grider A Packet Pg. 54
5.E
4540
Staff proposes to move forward under the current hourly rates for Management Partners
with an amount not to exceed an additional $400,000. The 2016-17 budget, has
sufficient resources to fund the additional services needed.
City Attorney Review:
Supporting Documents:
Management Partners Reso Third Amendment (DOC)
Agrmt 4540 (PDF)
Management Partners Support Letter (DOCX)
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Updated: 7/12/2016 by Jolena E. Grider A Packet Pg. 55
5.E.a
1 RESOLUTION NO.
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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
3 BERNARDINO AUTHORIZING THE EXECUTION OF A THIRD AMENDMENT TO M
THE CONSULTANT SERVICES AGREEMENT WITH MANAGEMENT PARTNERS, z6
4 INC. REGARDING THE BANKRUPTCY RECOVERY PLAN. r
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5 BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE Ec
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CITY OF SAN BERNARDINO AS FOLLOWS: a
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SECTION 1. The City Manager is hereby authorized and directed to execute a Third
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9 Amendment to the Consultant Services Agreement with Management Partners, Inc. for
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10 professional services related to the Bankruptcy Recovery Plan. a
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11 SECTION 2. The Finance Department is hereby authorized to increase the Purchase E
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Order to Management Partners, Inc. by an additional amount of$400,000 for consultant
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15 SECTION 3. The authorization granted hereunder shall expire and be void and of no
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16 further effect if the Agreement is not executed by both parties and returned to the Office of the
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City Clerk within sixty(60) days following the effective date of this Resolution.
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FPacket Pg. 56
5.E.a
® 1 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO AUTHORIZING THE EXECUTION OF A THIRD AMENDMENT TO
2 THE CONSULTANT SERVICES AGREEMENT WITH MANAGEMENT PARTNERS,
INC. REGARDING THE BANKRUPTCY RECOVERY PLAN.
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4 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and Z
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5 Common Council of the City of San Bernardino at a meeting thereof, held on
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the day of , 2016,by the following vote, to wit: a
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8 Council Members: AYES NAYS ABSTAIN ABSENT o
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9 MARQUEZ d
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11 VALDIVIA E
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13 SHORETT
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15 RICHARD =
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16 MULVIHILL
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18 Georgeann Hanna, City Clerk s
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The foregoing Resolution is hereby approved this day of , 2016.
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22 R. Carey Davis, Mayor =
City of San Bernardino E
23 Approved as to form:
Gary D. Saenz, City Attorney
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1 THIRD AMENDMENT TO CONSULTANT SERVICES AGREEMENT BETWEEN
2 THE CITY OF SAN BERNARDINO AND MANAGEMENT PARTNERS,INC.
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THE THIRD AMENDMENT is made and entered into as of July 18,2016 by and
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between the CITY OF SAN BERNARDINO,a charter city ("CITY')and MANAGEMENT
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6 PARTNERS, INC. ("Consultant"). In consideration of the mutual covenants and conditions set
7 forth herein, the parties agree as follows:
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s 1. This Amendment is made with respect to the following facts and purposes:
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a. On November 17, 2014, the City and Consultant entered into that certain
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11 agreement entitled "Consultant Services Agreement between the City of San
12 Bernardino and Management Partners,Inc." ("Agreement")for$300,000. 0
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13 b. On April 20, 2015, the City and Consultant entered into the First
14 Amendment to Consultant Services Agreement which increased the amount IL
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by $300,000.
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17 c. On August 17, 2015, the City and Consultant entered in the Second 2
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is Amendment to Consultant Services Agreement which increased the amount v
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by $600,000. LO
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2. Section 7 Compensation is hereby amended to increase the amount by $400,000 for
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22 fiscal year 2016/17.
23 3. Except for the changes specifically set forth herein, all other terms and conditions of w
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24 the Agreement shall remain in full force and effect.
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1 THIRD AMENDMENT TO CONSULTANT SERVICES AGREEMENT BETWEEN
2 THE CITY OF SAN BERNARDINO AND MANAGEMENT PARTNERS,INC.
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IN WITNESS THEREOF,the parties hereto have caused this Third Amendment to be
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6 executed by and through their respective authorized officers, as of the date first above written.
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8 CITY OF SAN BERNARDINO, CONSULTANT d
9 A Municipal Corporation Management Partners,Inc.
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11 Mark Scott, City Manager Andy Belknap, Partner
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Approved as to form:
15 Gary D. Saenz, City Attorney E
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Management
Partners
May 6,2016
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Mr.Mark Scott
City Manager E
City of San Bernardino
300 North "D" Street Q
San Bernardino, CA 92418
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Dear Mr. Scott: v
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This letter is to introduce the need for a contract amendment so that Management Partners can
continue providing support to the City with bankruptcy management and implementation of M CL
the Recovery Plan. First a few words about Management Partners and our philosophy.
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About Management Partners
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As you know, during our 22 years of service,we have earned a national reputation by
delivering quality, actionable work products to our clients. We bring extensive experience to
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this project, along with first-hand knowledge of local government operations, and intensive
experience working with the City of San Bernardino,not only in bankruptcy,but between 2007 v
and 2011 with City Managers Charles McNeely and Fred Wilson. w
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The firm is staffed with 80 professionals who are experienced public service managers as well as o
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qualified management consultants. This group includes generalists as well as subject-matter 3
experts. Our consultants have years of experience working in all aspects of local government Cn
management and have built a track record of extraordinary quality service for our clients.
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We have a great deal of experience helping government leaders cope with severe financial a
crises,including bankruptcy.We have worked with cities that have confronted profound
financial and service insolvency where major turnaround strategies were required to restore CD
service delivery solvency. Some of the jurisdictions we have assisted with significant financial c
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challenges include San Jose,Vallejo, Santa Ana, Long Beach,Modesto, Fresno and Stockton. E
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Contract Status E
As of April 15, 2016 Management Partners had$90,300 remaining on our current contract with
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the City of San Bernardino. The current contract amendment(Contract Amendment 2) was Q
approved in an amount of$600,000 in August 2015.We anticipate that the contract will be fully
exhausted no later than June 15, 2016. Previously San Bernardino has submitted a contract
extension and authorization for additional funding to the Mayor and City Council when the
1730 MADISON ROAD • CINCINNATI,OH 45206 • 513 8615400 • FAX 513 8613480 MANAGEMENTPARTNERS.COM
2107 NORTH FIRST STREET,SUITE 470 • SAN JOSE,CALIFORNIA 95131 • 408 437 5400 • FAx 408 453 6191
3152 RED HILL AVENUE,SUITE 210 • COSTA MESA,CALIFORNIA 92626 • 949 222 1082 • FAX Packet Pg.60
Mr.Mark Scott Page 2
existing contract authorization is reached. I wanted to give you adequate notice to prevent any
disruptions.
For background,Management Partners has been assisting the City of San Bernardino since
December 2014.We were retained to manage the bankruptcy process for the City and most
importantly to get a plan of adjustment,known as the Recovery Plan, done by a court-ordered o
deadline of May 31,2015.Our work logically evolved to assist in implementing the Recovery Z
Plan,which is the City's roadmap for regaining fiscal and operational solvency.
When we began to assist the City it had already been in bankruptcy for approximately 28
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months.We developed a timeline and scope of work for completing the Recovery Plan.This a
included briefing the Council(which had not been involved in the bankruptcy) and facilitating
a series of community meetings aimed at development of a strategic plan to support the o
Recovery Plan.We also developed management and expenditure tracking tools to guide the v
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work of the bankruptcy team and keep the Council informed.The initial draft Recovery Plan c,
was presented to the Mayor and Common Council in April 2015, and adopted on May 18,2015.
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Since that time Management Partners has continued to assist the City with bankruptcy
management and court filings including periodic updates to the Recovery Plan.We also have
been responsible for working with City staff,other consultants and legal counsel to implement c
Recovery Plan components.This has mainly involved designing and implementing alternative
service delivery approaches to reduce expenditures and increase revenues, supporting the
charter reform effort,negotiating with creditors and creating settlements,and analyzing how v
the City can rebuild service delivery capacity.
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We have been able to implement or partially implement a number of Recovery Plan initiatives
such as annexation to the County Fire District,contracting for solid waste services(as well as °
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right-of-way maintenance and street sweeping), and debt restructuring.These actions have cn
saved the City millions of dollars and generated millions in both ongoing and one-time L
revenues. c
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Work During FY 2016-17
During the rest of 2016 our goal is to completely implement the Recovery Plan and to assist the E
City in securing an exit from bankruptcy status. From now until the end of the year we
anticipate continuing to staff and support the weekly strategic bankruptcy team meetings,
complete the fire annexation project,complete negotiated settlements with creditors such as the
pension obligation bond creditors, and support the bankruptcy attorney with the Disclosure
Statement and related court filings.
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Most important will be full implementation of the Recovery Plan,which calls for a number of Q
initiatives to be completed in 2016 including implementing a street sweeping parking
enforcement program,updating the City's user fee policy and fee levels, assisting with
consideration of other contracting options such as fleet services and business license
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Mr.Mark Scott Pa g
administration and a variety of organizational development efforts focusing on rebuilding core
support service capabilities.
As has been our practice from the start,Management Partners' role will be to supplement and
manage the current work of the bankruptcy team and staff to help the City complete the
bankruptcy process and fill gaps where needed to secure a successful result. o
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It is difficult to predict the level of effort that Management Partners will need to devote to
bankruptcy and Recovery Plan efforts.We recommend a basic allocation of$400,000 for the
remainder of June 2016 and the 2016-17 fiscal year.This reflects a significant reduction in
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spending since our engagement started,but we believe the status of the situation and the work Q
accomplished during the last year makes it possible. i
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With your support Management Partners can continue to be"force multiplier" for the City at v
this difficult and fragile time in its history.In bankruptcy delay only increases costs and
prevents the City from moving forward with economic and community betterment issues that
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are the true priority for a public service organization.To achieve a timely and successful exit a
from bankruptcy the process must be effectively managed,and this is not something a city E
manager can do in his or her "spare time." For San Bernardino the bankruptcy and a successful
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exit offers a rare opportunity for rebuilding and renewal,but the window of opportunity is
limited.
The work that you and all of the others on the City leadership team(elected and appointed) do v
to "right the ship" of San Bernardino's government is unusually important,both for the
residents of the City and for the profession of local government leaders nationally. We look
forward to the opportunity to support your work. Please feel free to contact me or Andy
Belknap if you have any questions about this proposal. a
Sincerely, L
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Gerald E.Newfarmer a,
President and CEO c
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