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Item 4C - MemoMEMORANDUM April 9, 2024 To: Alison Ortowski, City Manager From: Sharen Jackson, Chief Financial Officer Subject: Approve a professional services agreement with CityBase in an amount not to exceed $58,500 for financial data consulting services Action Requested: Approval of the professional services agreement with CityBase for financial data consulting services. Background Information: Ordinance No. 1104 was approved by the Southlake City Council in 2015, adopting the Sustainability Master Plan. An element of this plan analyzed and provided policy direction on economic and fiscal wellness. As discussed during the winter workshop, it is time to update the plan. CityBase is an experienced consultant in data mining, financial forecasting, and statistical analysis. Additionally, CityBase has extensive knowledge of Southlake’s history, having previously assisted with the 2015 Sustainability Comprehensive Plan. Their proven record of success in previous projects instills confidence in their ability to assist in updating the plan. The scope of work outlined in the contract aligns with the city’s needs and objectives to successfully update the Sustainability Comprehensive Plan. Financial Considerations: The funding is budgeted in the Strategic Initiative Fund Strategic Link: F1 Safeguarding the public trust through a commitment to thoughtful planning and responsible, conservative financial management. F2 Investing to provide & maintain high quality public assets. B3 Maintaining an environment of future readiness by understanding and acting upon the forces, trends, and coming challenges affecting services. Item 4C Honorable Mayor and City Council Page 2 of 2 Citizen Input/ Board Review: None required. Legal Review: The city attorney reviewed the agreement. Alternatives: Deny or propose changes to the agreement. Supporting Documents: Professional Services Agreement Staff Recommendation: Approval of the professional services agreement Services Agreement CityBase.Net Page 1 of 12 City of Southlake Proposal for a Comprehensive Financial Planning Process (MYFP) Lewis F. McLain, Jr., President dba CityBase.Net March 2024 Services Agreement CityBase.Net Page 2 of 12 This proposal will encompass as many of the elements in the mindmap above as possible. As might be expected, not everything can be accomplished in the first year. Even though this proposal obligates the City to only one year at a time, it is being made with the expectation that the agreement will be continued for several years. The intended services include taking advantage of the full array of data that will be made available to the Consultant by the City. It builds on Zero-Base Budgeting principles yet with a very granular expenditure documentation features down to the justification of line items in the spirit of Baseline Budgeting. The Consultant was the Budget Director of Garland, the first city to implement ZBB by the creator of the process. While ordinary budgeting is generally bottom-up with Budget Managers grinding out budgets and sending to upper management to balance, this MYFP process is more top- down. By top-down, it is meant to first be developed as a managerial tool with forecasts constrained by historical parameters derived from analysis. The City Manager starts with a balanced budget. Whether or not most cities are aware of having their own DNA, it exists. And it is also true that there are more similarities than differences between cities within a region. Further, there are even more similarities within a given city over a number of years when adjusted for population growth and Inflation. Hence, MYFP embraces and builds on those similarities. Please let us know what we can do to obtain the necessary approvals to get this exciting project off the ground. LFM. Services Agreement CityBase.Net Page 3 of 12 PROFESSIONAL SERVICES AGREEMENT This PROFESSIONAL SERVICES AGREEMENT (“Agreement”) is made and entered into by and between the City of Southlake (the “CITY”), a subdivision of the State of Texas situated in Tarrant County, Texas, acting by and through Alison D. Ortowski, its duly authorized City Manager, and CITYBASE.NET, (“CONSULTANT” or “LFM”), acting by and through Lewis F. McLain, Jr., its duly authorized president. The CITY and CONSULTANT are individually referred to herein as a party and collectively referred to as parties. RECITALS: WHEREAS, CONSULTANT is highly qualified to construct the necessary models and analysis to build a Multi-Year Financial Plan (MYPF), and WHEREAS, this service will allow for analyzing and reporting of All Operating, Debt Service, Special Revenue, Internal Service Funds & Capital Funds to enable the CITY to better understand future needs and the methods of funding the future; and WHEREAS, the services and products provided will assist the CITY in recognizing revenue vulnerabilities and to better understand the current and historical data as well as to forecast future revenues. NOW THEREFORE, for mutual and valuable consideration and covenants set forth herein, the parties do hereby agree as follows: 1. SCOPE OF SERVICES. CONSULTANT hereby agrees to provide the CITY with professional consulting services for the purpose of constructing and maintaining a Multi-Year Financial Plan. Attached hereto and incorporated for all purposes incident to this Agreement is Exhibit “A,” Scope of Services, more specifically describing the services to be provided hereunder. 2. TERM. This Agreement shall be effective as of the date of signing (“Effective Date”) and shall have a 12- month term (“Initial Term”), unless terminated earlier in accordance with the provisions of this Agreement. Following expiration of the Initial Term, this Agreement shall automatically renew for one additional year (“Automatic Renewal Term”), unless terminated earlier in accordance with the provisions of this Agreement. Following the Automatic Renewal Term, the CITY shall have the option to renew this Agreement for five additional years under the same terms and conditions. The CITY shall provide Contractor with thirty (30) days prior written notice of its intent not to renew. 3. COMPENSATION. The CITY shall pay CONSULTANT fees in an amount not to exceed $58,500 per year (“contract amount”) for the Initial Term, and $38,500 per year, before discounts and other incentives, for each Renewal Term in accordance with the provisions of this Agreement and the Fee Schedule attached as Exhibit “B,” which is incorporated for all purposes herein. The CITY shall not reimburse CONSULTANT for expenses for any item(s) CONSULTANT is required to procure in order to perform its obligations under this Agreement unless the CITY first approves such expenses in writing. 4. TERMINATION. 4.1. Written Notice. The CITY or CONSULTANT may terminate this Agreement at any time and for any reason Services Agreement CityBase.Net Page 4 of 12 by providing the other party with 30 days written notice of termination 4.2 Non-appropriation of Funds. In the event no funds or insufficient funds are appropriated by the CITY in any fiscal period for any payments due hereunder, CITY will notify CONSULTANT of such occurrence and this Agreement shall terminate on the last day of the fiscal period for which appropriations were received without penalty or expense to the CITY of any kind whatsoever, except as to the portions of the payments herein agreed upon for which funds shall have been appropriated. 4.3 Duties and Obligations of the Parties. In the event that this Agreement is terminated prior to the Expiration Date, the CITY shall pay CONSULTANT for services actually rendered up to the effective date of termination and CONSULTANT shall continue to provide the CITY with services requested by the CITY and in accordance with this Agreement up to the effective date of termination. 5. DISCLOSURE OF CONFLICTS AND CONFIDENTIAL INFORMATION. CONSULTANT hereby warrants to the CITY that CONSULTANT has made full disclosure in writing of any existing or potential conflicts of interest related to CONSULTANT's services under this Agreement. In the event that any conflicts of interest arise after the Effective Date of this Agreement, CONSULTANT hereby agrees immediately to make full disclosure to the CITY in writing. CONSULTANT, for itself and its officers, agents and employees, further agrees that it shall treat all information provided to it by the CITY as confidential and shall not disclose any such information to a third party without the prior written approval of the CITY. CONSULTANT shall store and maintain CITY Information in a secure manner and shall not allow unauthorized users to access, modify, delete or otherwise corrupt CITY Information in any way. CONSULTANT shall notify the CITY immediately if the security or integrity of any CITY information has been compromised or is believed to have been compromised. Parties acknowledge that the CITY is subject to the Texas Public Information Act, codified in Chapter 552 of the Texas Government Code. Subject to the requirements of the Texas Public Information Act, should the CITY receive a request for information subject to the Texas Public Information Act, deemed confidential by this section, CITY will notify CONSULTANT and submit a letter to the Texas Attorney General in accordance with the requirements of the Texas Public Information Act, provided CONSULTANT submits arguments to the Texas Attorney General to substantiate any claim of confidentiality. 6. RIGHT TO AUDIT. CONSULTANT agrees that the CITY shall, until the expiration of three (3) years after final payment under this contract, have access to and the right to examine at reasonable times any directly pertinent books, documents, papers and records of the CONSULTANT involving transactions relating to this Contract at no additional cost to the CITY. CONSULTANT agrees that the CITY shall have access during normal working hours to all necessary CONSULTANT facilities and shall be provided adequate and appropriate workspace in order to conduct audits in compliance with the provisions of this section. The CITY shall give CONSULTANT reasonable advance notice of intended audits. CONSULTANT further agrees to include in all its subcontractor agreements approved by the CITY hereunder a provision to the effect that the subcontractor agrees that the CITY shall, until expiration of three (3) years after final payment of the subcontract, have access to and the right to examine at reasonable times any directly pertinent books, documents, papers and records of such subcontractor involving transactions related to the subcontract, and further that CITY shall have access during normal working hours to all subcontractor facilities and shall be provided adequate and appropriate workspace in order to conduct audits in compliance with the provisions of this paragraph. CITY shall give subcontractor Services Agreement CityBase.Net Page 5 of 12 reasonable notice of intended audits. 7. INDEPENDENT CONTRACTOR. It is expressly understood and agreed that CONSULTANT shall operate as an independent contractor as to all rights and privileges granted herein, and not as agent, representative or employee of the CITY. Subject to and in accordance with the conditions and provisions of this Agreement, CONSULTANT shall have the exclusive right to control the details of its operations and activities and be solely responsible for the acts and omissions of its officers, agents, servants, employees, contractors and subcontractors. CONSULTANT acknowledges that the doctrine of respondeat superior shall not apply as between the CITY, its officers, agents, servants and employees, and CONSULTANT, its officers, agents, employees, servants, contractors and subcontractors. CONSULTANT and CITY further agree that nothing herein shall be construed as the creation of a partnership or joint enterprise between CITY and CONSULTANT. 8. LIABILITY AND INDEMNIFICATION. CONSULTANT SHALL BE LIABLE AND RESPONSIBLE FOR ANY AND ALL PROPERTY LOSS, PROPERTY DAMAGE ANDIOR PERSONAL INJURY, INCLUDING DEATH, TO ANY AND ALL PERSONS, OF ANY KIND OR CHARACTER, WHETHER REAL OR ASSERTED, TO THE EXTENT CAUSED BY THE NEGLIGENT ACT(S) OR OMISSION(S), MALFEASANCE OR INTENTIONAL MISCONDUCT OF CONSULTANT, ITS OFFICERS, AGENTS, SERVANTS OR EMPLOYEES. CONSULTANT COVENANTS AND AGREES TO, AND DOES HEREBY, INDEMNIFY, HOLD HARMLESS AND DEFEND THE CITY, ITS OFFICERS, AGENTS, SERVANTS AND EMPLOYEES, FROM AND AGAINST ANY AND ALL CLAIMS OR LAWSUITS FOR EITHER PROPERTY DAMAGE OR LOSS (INCLUDING ALLEGED DAMAGE OR LOSS TO CONSULTANT'S BUSINESS AND ANY RESULTING LOST PROFITS) ANDIOR PERSONAL INJURY, INCLUDING DEATH, TO ANY AND ALL PERSONS, OF ANY KIND OR CHARACTER, WHETHER REAL OR ASSERTED, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, TO THE EXTENT CAUSED BY THE NEGLIGENT ACTS OR OMISSIONS OR MALFEASANCE OF CONSULTANT, ITS OFFICERS, AGENTS, SERVANTS OR EMPLOYEES. 9. ASSIGNMENT AND SUBCONTRACTING. CONSULTANT shall not assign or subcontract any of its duties, obligations or rights under this Agreement without the prior written consent of the CITY. 10. INSURANCE. The CONSULTANT shall carry the following insurance coverage with a company that is licensed to do business in Texas or otherwise approved by the CITY:  Professional Liability (Errors & Omissions) in the amount of $1,000,000 per claim and $1,000,000 aggregate limit, unless waived. General Insurance Requirements, unless waived • All applicable policies shall name the CITY as an additional insured thereon, as its interests may appear. The term CITY shall include its employees, officers, officials, agents, and volunteers in respect to the contracted services. • A minimum of Thirty (30) day notice of cancellation or reduction in limits of coverage shall be provided to the CITY. A ten (10) day notice shall be acceptable in the event of non- payment of premium. Notice shall be sent to CITY Manager, with copies to the CITY ATTORNEY at the same address shown in Section 13. Services Agreement CityBase.Net Page 6 of 12 • The insurers for all policies must be licensed and/or approved to do business in the State of Texas. All insurers must have a minimum rating of A- VII in the current A.M. Best Key Rating Guide, or have reasonably equivalent financial strength and solvency to the satisfaction of Risk Management. If the rating is below that required, written approval of Risk Management is required. • Any failure on the part of the CITY to request required insurance documentation shall not constitute a waiver of the insurance requirement. • Certificates of Insurance evidencing that the CONSULTANT has obtained all required insurance shall be delivered to the CITY prior to CONSULTANT proceeding with any work pursuant to this Agreement. 11. COMPLIANCE WITH LAWS, ORDINANCES, RULES AND REGULATIONS. CONSULTANT agrees to comply with all applicable federal, state and local laws, ordinances, rules and regulations. If the CITY notifies CONSULTANT of any violation of such laws, ordinances, rules or regulations, CONSULTANT shall immediately desist from and correct the violation. CONSULTANT acknowledges that all information will be considered not public information and will not be made public information unless instructed to do so. Disclosure of any information will be to authorized staff only. 12. NON-DISCRIMINATION COVENANT. CONSULTANT, for itself, its personal representatives, assigns, subcontractors and successors in interest, as part of the consideration herein, agrees that in the performance of CONSULTANT’s duties and obligations hereunder, it shall not discriminate in the treatment or employment of any individual or group of individuals on any basis prohibited by law. If any claim arises from an alleged violation of this non- discrimination covenant by CONSULTANT, its personal representatives, assigns, subcontractors or successors in interest, CONSULTANT agrees to assume such liability and to indemnify and defend the CITY and hold the CITY harmless from such claim. 13. NOTICES. Notices required pursuant to the provisions of this Agreement shall be conclusively determined to have been delivered when (1) hand-delivered to the other party, its agents, employees, servants or representatives, (2) delivered by facsimile with electronic confirmation of the transmission, or (3) received by the other party by United States Mail, registered, return receipt requested, addressed as follows: To The CITY: To CONSULTANT: City of Southlake CityBase.Net Attn: Alison D. Ortowski, City Manager Attn: Lewis F. McLain, Jr., President Address: 1400 Main Street, Ste 460 4906 Morning Glory Way City: Southlake, TX 76092 McKinney, TX 75070 Phone: 817-748-8001 214-793-7729 Email: aortowski@ci.southlake.tx.us lewis.mclain@outlook.com To CITY Attorney: Taylor, Olson, Adkins, Sralla, and Elam, LLP Attn: Cara White Address: 6000 Western Place City: Fort Worth, Texas, 76107 Phone: 817-332-2580 Email: cwhite@toase.com Services Agreement CityBase.Net Page 7 of 12 14. SOLICITATION OF EMPLOYEES. Neither the CITY nor CONSULTANT shall, during the term of this agreement and additionally for a period of one year after its termination, solicit for employment or employ, whether as employee or independent contractor, any person who is or has been employed by the other during the term of this agreement, without the prior written consent of the person's employer. 15. GOVERNMENTAL POWERS. It is understood and agreed that by execution of this Agreement, the CITY does not waive or surrender any of its governmental powers or governmental immunity. 16. NO WAIVER. The failure of the CITY or CONSULTANT to insist upon the performance of any term or provision of this Agreement or to exercise any right granted herein shall not constitute a waiver of the CITY's or CONSULTANT's respective right to insist upon appropriate performance or to assert any such right on any future occasion. 17. GOVERNING LAW / VENUE. This Agreement shall be construed in accordance with the internal laws of the State of Texas. If any action, whether real or asserted, at law or in equity, is brought on the basis of this Agreement, venue for such action shall lie in state courts located in Tarrant County, Texas. 18. SEVERABILITY. If any provision of this Agreement is held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired. 19. FORCE MAJEURE. The CITY and CONSULTANT shall exercise their best efforts to meet their respective duties and obligations as set forth in this Agreement, but shall not be held liable for any delay or omission in performance due to force majeure or other causes beyond their reasonable control (force majeure), including, but not limited to, compliance with any government law, ordinance or regulation, acts of God, acts of the public enemy, fires, strikes, lockouts, natural disasters, wars, riots, material or labor restrictions by any governmental authority, transportation problems and/or any other similar causes. 20. HEADINGS NOT CONTROLLING. Headings and titles used in this Agreement are for reference purposes only and shall not be deemed a part of this Agreement. 21. REVIEW OF COUNSEL. The parties acknowledge that each party and its counsel have reviewed and revised this Agreement and that the normal rules of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or exhibits hereto. Services Agreement CityBase.Net Page 8 of 12 22. AMENDMENTS / MODIFICATIONS / EXTENSTIONS. No extension, modification or amendment of this Agreement shall be binding upon a party hereto unless such extension, modification, or amendment is set forth in a written instrument, which is executed by an authorized representative and delivered on behalf of such party. 23. ENTIRETY OF AGREEMENT. This Agreement, including the schedule of exhibits attached hereto and any documents incorporated herein by reference, contains the entire understanding and agreement between the CITY and CONSULTANT, their assigns and successors in interest, as to the matters contained herein. Any prior or contemporaneous oral or written agreement is hereby declared null and void to the extent in conflict with any provision of this Agreement. 24. SIGNATURE AUTHORITY. The person signing this agreement hereby warrants that he/she has the legal authority to execute this agreement on behalf of the respective party, and that such binding authority has been granted by proper order, resolution, ordinance or other authorization of the entity. The other party is fully entitled to rely on this warranty and representation in entering into this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement in multiples this _____ day of ______________, 2024. CITY OF SOUTHLAKE By: Alison D. Ortowski City Manager Date: _________________________ ATTEST: By: Secretary CONTRACT AUTHORIZATION: Number: Date Approved: ________________ CITYBASE.NET: By: Lewis F. McLain, Jr. President Date: ____________________________ ATTEST: By: Name: Title: Services Agreement CityBase.Net, Inc. Page 8 of 12 EXHIBIT A SCOPE OF SERVICES Multi-Year Financial Plan Introduction Lewis F. McLain, Jr., President, CityBase.Net, Inc. (LFM) is highly qualified to construct and maintain a MYFP Model & Reporting System (See Attachment A). LFM and the City of Southlake (“CITY”) enter into this Agreement for a MYFP Model & Reporting System, a service (not software) with a variety of products that are described in the Scope of Service section below. Scope of Services • The MYFP will be for at least for a five-year period, including all funds, balance sheets and income statements. • There will also be a five-year history compiled that ties to the Financial Statements and Budgets. • The MYFP will be developed at the line item level. • Staffing tables will be incorporated. • Growth estimates will consider inflation and population-driven increases. • Other drivers (workload measures and performance data) will be used as much as possible. • Infrastructure aging and replacement data will be incorporated with staff assistance. • Vehicle aging and replacement data will be incorporated with staff assistance. • All CIP plans will be incorporated. • Debt issuance and detailed debt schedules will be incorporated. • Reserve policies will be reviewed, defined and analyzed. • Receivables aging will be incorporated with staff assistance. • General & Administrative Costs will be analyzed. • Payments in lieu of taxes (PILOTs) for property taxes, franchise taxes will be computed for consideration. • Assumptions will be built in every place possible for reasonably easy changes. • Alternative Scenarios will be considered within reason. • Two presentations will be prepared, one for the Staff and the other for the Council. • Individual department meetings for data input and review will be the responsibility of the city staff. Timetable CITY shall provide the certain information as listed in Exhibit C. Work will commence immediately but no later than April 1, 2024. It is anticipated that a working report will be available to the Staff in advance of budget workshops with the City Council in the summer of 2024. Services Agreement CityBase.Net, Inc. Page 9 of 12 Ownership of Data & Work Products This Agreement is intended to be a service agreement and is not a software sale or lease. Therefore, LFM and CITY agree to these following items. • LFM’s work product given to CITY shall be in the form of Adobe PDF files, Excel Spreadsheets or online reports. There will be no paper reports. All PDF files shall be delivered to only staff persons designated by CITY. • LFM may use the latest versions of Excel, SQL Server, Power BI and Crystal Reports and several other Business Intelligence software tools LFM finds ideal for this service. These work products belong to LFM and shall not be the property of CITY. Confidential Information & Security All of the information will be kept confidential in accordance with state laws. CityBase would prefer to exchange data and products only through named CITY employees so that a clear “chain of custody” is documented. Services Agreement CityBase.Net, Inc. Page 10 of 12 EXHIBIT B FEE SCHEDULE MYFP: $58,500 per year for the first year and then $38,500 for each subsequent sequential fiscal year. Billing Schedule: • June 30, 2024 $14,625. • September 30, 2024 $14,625. • December 31, 2024 $14,625. • March 31, 2025 $14,625. • June 30, 2025 $ 9,625. (and each June 30 agreement is extended). • September 30, 2025 $ 9,625. (and each September 30 agreement is extended). • December 31, 2025 $ 9,625. (and each December 31 agreement is extended). • March 31, 2025 $ 9,625. (and each March 31 agreement is extended). Services Agreement CityBase.Net, Inc. Page 11 of 12 EXHIBIT C Requested Information for MYFP 1. Pre-closing and post-closing Trial Balances for all funds for the past ten years. 2. A listing of all related Accounts Receivable as of the end of September 2023 in order for an aging report to be prepared. 3. A listing of all Write-Offs, if any, for the past five years. 4. A current listing of meters with manufacturer, model, size, serial numbers, installation date with total volume as of the most recent month 2024 and any other information on file regarding water meters and, if any, sewer meters. 5. Monthly bills from any wholesale water & sewer provider that shows volume, peak day, peak hour, BOD & TSS metrics and any other pertinent billing information such as billing/metering adjustments. 6. Any agreements and data related to system/cost sharing considerations. 7. Any information related to the infrastructure including streets, sidewalks, drainage system, water and sewer line segments by size, length and age. Also, a listing of water tanks, wells, pumps, fire hydrants, major valves, lift stations in order to do an aging analysis. 8. Information related to major maintenance, repair, rehabilitation or replacement plans in the next five years, including storage tank painting. 9. All information that can assist in the calculation of Water Loss & Unaccounted For as well as Wastewater Inflow/Infiltration for the past five years. 10. Vehicle & Equipment Inventory with typical fleet maintenance information such as make, model, initial cost, purchase date, miles and/or hours, along with any kind of replacement schedule to cover the next five years. 11. Copies of any Texas Municipal Advisory Council reports as well as any bond rating reports for the past five years. 12. Past AFCRs and Officials Statements have already been accessed from MSRB/EMMA.