E3. Award Engagement Letter for Bond CouncilKalispell City Attorney's Office
(406) 758-7709
CITY of P.O. Box 1997, 201 1st Ave. East
ALISPELL
Kalispell, Montana, 59903-1997
www.kalispell.com
REPORT TO: Doug Russell, City Manager
FROM: Johnna Preble, City Attorney
SUBJECT: Bond/Tax Counsel Recommendation and Engagement Letter Approval
MEETING DATE: August 5, 2024
BACKGROUND: The City requires Bond/Tax Counsel preliminary to and accompanying the
rendering of an approving opinion as to the legality and tax-exempt status of, and the sale of, City
revenue bonds or other debt instruments. Ballard Spahr LLP provided the sole response to the
City's Request for Qualifications. The City has engaged Ballard Spahr LLP as Bond/Tax Counsel
several times in the past.
REQUIRED SERVICES: Services to be performed by Bond/Tax Counsel shall include, but are
not limited to, the following:
1. Review the financing programs and funds proposed from time to time by City staff and its
financial advisor(s) and provide advice as to compliance of the program with applicable
law, pending or proposed revisions in the law, including U.S. Treasury rules and
regulations, and the City's Bond Resolution and other governing documents.
2. Services Relative to Primary Debt Offerings
a. Serve as a member of the City's financing team and attend meetings and
participate in conference calls of the City and its committees, when so requested;
b. Advise as to procedures, required approvals and filings, schedule of events for
timely issuance, and other legal matters relative to capital projects, and the
issuance of the bonds or other debt instruments, whether the financing is
undertaken by competitive bid or negotiated sale;
c. Prepare an appropriate resolution and any amendments thereto in order to
authorize the issuance of the bonds or other debt instruments;
d. Prepare any amendments or supplements to the City's Bond Resolution, and
prepare trustee, registrar or paying agent agreements or similar documents
necessary or desirable in connection with the financing;
Page 1 of 3
e. If sale is by competitive bid, assist in preparation of the bid documents, notice of
sale, and any other documentation or action necessary to conduct a sale of the
bonds in that manner;
f. If sale is negotiated, assist in the review of the bond purchase agreement and
preparation of any other documentation or action necessary to conduct a sale in
that manner;
g. Review the preliminary official statement and official statement and preparation of
the award resolution, and any amendments thereto, for the sale of the bonds;
h. Prepare, obtain, deliver and file all closing documents necessary in connection
with the sale and issuance of the bonds or other debt instruments;
i. Provide bound and electronic copies of the closing documents in the number
requested by the City;
j. Issue standard, comprehensive Bond/Tax Counsel opinions as to the legality of the
bonds or other debt instruments, the security for their payment and the exemption
from federal income taxation of the interest on the bonds and other appropriate
opinions that may be required; and
k. Prepare documentation in connection with any public hearing and approval process
related to the issuance of debt by the City.
3. Review or prepare, as directed by the City Attorney, all pleadings for filing in the
validation proceedings, if any.
4. Review the transcript of all proceedings in connection with the foregoing and indicate any
necessary corrective action.
5. Advise the City with respect to matters concerning capital projects, its outstanding senior
lien bonds, subordinate debt, other parity indebtedness, and any other financial matters
related to the issuance of debt or investments of debt proceeds that may be requested by
the City.
6. Provide assistance with the interpretation of, and preparation of amendments to, the Bond
Resolution as required.
7. Advise the financing team as to tax matters relative to issuance of debt instruments and
determination of tax status of project (e.g. AMT, Non-AMT or Taxable).
8. Assist the City in complying with applicable Federal and State tax laws and regulations.
9. Provide general advice and consultation to the City and its financing team related to tax
issues. Educate City staff on applicable tax regulations associated with their debt offerings
and assist in establishing guidelines and procedures for monitoring the use of proceeds to
comply with all tax regulations.
10. Proactively advise the City about required filings and other compliance issues, and
changes or proposed changes in applicable law and regulations.
11. Perform such other services related to the foregoing as may be requested by the City from
time to time.
Page 2 of 3
RECOMMENDATION: Staff is recommending Ballard Spahr LLP be awarded the contract
based on their qualifications.
ACTION REQUESTED: Motion to select Ballard Spahr LLP as the Bond/Tax Counsel.
FISCAL EFFECTS: The City has previously engaged Ballard Spahr LLP as Bond/Tax Counsel.
It is anticipated that the costs will remain consistent with prior engagements subject to change
depending on the number of City projects and as described in the attached Engagement Letter.
ALTERNATIVES: As suggested by the City Council.
ENCLOSURE: Draft Engagement Letter from Ballard Spahr LLP
Page 3 of 3
Ballard Spahr
200o IDS Center
8o South 8th Street
Minneapolis, MN i5402-zn9
TEL 612.371.3211
FAx 612.3 71.3 207
wwwballardspahr.com
July , 2024
Johnna Preble, City Attorney
City of Kalispell
201 15t Avenue East
Kalispell, MT 59901
Benjamin W. Johnson
Tel: (612) 371-6223
Fax: (612) 371-3207
j ohnsonbwgballardspahr.com
Re: Agreement to Pay for Legal Services Provided as Bond and Tax Counsel
Dear Johnna:
The purpose of this letter is to confirm the terms and conditions under which our firm will serve as
bond and tax counsel for the City of Kalispell, Montana (the "City") in connection with the issuance of
various bond issues (the "Bonds") to be issued by the City within the next three (3) years. The issuance of
any Bonds is described herein as a "Transaction".
Attached to this engagement letter are our standard terms of engagement (the "Standard Terms").
Please note that the Standard Terms do include an advanced consent provision for our law firm to represent
possible parties to a Transaction, such as banks, bond trustees, and underwriting (investment banking) firms,
in unrelated transactions that do not involve the City.
Services
Bond and Tax Counsel. As bond and tax counsel, we will provide the following services as and
when requested by the City, with respect to each Transaction:
Meet with and assist the City, the City Attorney, and any other parties involved ("Other
Parties") in structuring each Transaction, and provide the City with details of using certain
structures and the legal requirements associated therewith.
2. Prepare the basic documentation for each Transaction, including bond resolutions and bond
certificates, together with petitions, affidavits, notices, resolutions and certifications related
thereto.
Attend any City Council meetings as requested by the City.
4. Coordinate the scheduling and supervise the closing of each Transaction, including
preparation of required closing documents and transcripts.
Subject to the completion of proceedings to our satisfaction with respect to incurrence/issuance of
Bonds, we will render our opinion letter to the effect that: (1) such Bonds are the valid and binding special,
Johnna Preble, City Attorney
June ,2024
Page 2
limited obligation of the City, enforceable against the City in accordance with their terms; and (ii) the
interest on the Bonds is excludable from gross income for federal income tax purposes and is exempt from
taxation in the State of Montana (all subject to certain limitations which will be expressed in the opinion).
The opinion will be executed and delivered by us in written form on the closing date of each
Transaction (the "Closing") and will be based on facts and law existing as of its date. In rendering the
opinion, we will rely upon the certified proceedings and other certifications of public officials and other
persons furnished to us, without undertaking to verify the same by independent investigation.
Upon delivery of the bond counsel opinion for the Bonds, our responsibilities as bond and tax
counsel will be concluded with respect to such Transaction. Specifically, but without implied limitation,
we do not undertake (unless separately engaged) to provide continuing advice to the City or any other parry
concerning any actions necessary to assure that interest on any tax-exempt Bonds will continue to be
excludable from gross income for federal income tax purposes.
As bond and tax counsel, we will not provide the following services in connection with a Transaction:
We will not review the financial condition of the City, the feasibility of the projects to be
financed or refinanced with the proceeds of the Bonds or the adequacy of the security
provided to owners of the Bonds, and we will express no opinion relating thereto.
2. Except as specifically set forth above, we will not assume or undertake responsibility for
the preparation of an official statement or any other disclosure document with respect to the
Bonds, nor are we responsible for performing an independent investigation to determine
the accuracy, completeness or sufficiency of any such document.
We will not provide any other services not specifically set forth above.
Fees
We anticipate negotiating our fixed fees for each Transaction based upon the facts and
circumstances of such Transaction. Our fees will be based on the reasonable value of our services as
determined in accordance with the Rules of Professional Conduct governing attorneys. The primary basis
for computing our fees will be the hourly billing rate of each attorney or paralegal working on the matter.
Our billing rates are adjusted annually, typically in December.
In addition to our fees, we will be entitled to payment of our other charges which include messenger,
courier, and express delivery charges; printing and reproduction charges; transcript preparation, travel
expenses and approved computerized legal research charges, if any, consistent with our proposal.
Our fee and charges are usually paid at the Closing of a transaction, and we customarily do not
submit any statement until the Closing unless there is a substantial delay in completing the financing.
Conclusion
If you do not agree with any of the items set forth in this letter, please inform me, in writing,
immediately. Unless I receive such written notice from you within the fourteen (14) days from the date of
this letter, then the City will be deemed to have agreed to all of the foregoing.
Johnna Preble, City Attorney
June ,2024
Page 3
You may terminate our engagement as bond counsel at any time simply by notifying us. We may
terminate our engagement for nonpayment of our fees and other charges and where we are required or
permitted to do so by the Rules of Professional Conduct after giving you reasonable notice and allowing
time for you to engage successor counsel, if necessary.
We are again pleased to have this opportunity to be of service to you.
Sincerely,
Benjamin W. Johnson
DM FIRM #412788613 v2
Ballard Spahr
Terms of Engagement
The following terms together with the accompanying letter of engagement constitute the terms of
your engagement of Ballard Spahr LLP ("Ballard Spahr") as your lawyers. Unless modified in
writing by mutual agreement, these terms will be an integral part of Ballard Spahr's agreement
with you. Therefore, we ask that you review these terms carefully and contact us promptly if
you have any questions. We suggest that you retain these terms in your file.
1. CLIENT. It is understood that Ballard Spahr's Client for purposes of this representation
is limited to the individual or entity specifically identified in the engagement letter and does not
include others.
2. SCOPE OF REPRESENTATION. Our representation is limited to performance of the
services expressly described in the engagement letter and does not include representation of you
or your interests in any other matter. It is important that you have a clear understanding of the
legal services we will provide and that you contact us promptly to discuss any questions that you
may have about them. You may limit or expand the scope of the representation from time to
time, provided that any substantial change is agreed to by us and made in writing. We will
provide legal counsel to you in reliance upon information and guidance provided by you, keep
you reasonably informed of the status of the matter, and respond to your inquiries. Any
expressions on our part concerning the outcome of your legal matters are expressions of our
professional judgment, but are not guarantees. Such opinions are necessarily limited by our
knowledge of the facts and are based on the state of the law at the time they are expressed.
3. REGARDING FEDERAL TAX ADVICE. In the course of our representation, we may
render tax advice to you on various legal matters. You understand that you may not use such tax
advice to avoid any penalties that may be imposed by the Internal Revenue Service unless, in
accordance with the Internal Revenue Service rules of practice, we are specifically engaged to
provide a formal, written tax opinion for that purpose. Accordingly, you acknowledge that we
may legend any written tax advice that we provide in the course of this engagement to indicate
that it may not be relied on for purposes of penalty protection. You further understand that our
representation does not include the provision of any tax advice concerning transactions in which
you may participate that would be "reportable transactions" within the meaning of Section
6707A of the Internal Revenue Code of 1986, as amended, and that our provision of tax advice
concerning such transactions would require a separate engagement for that purpose. In
particular, we shall not advise as to any transaction in which you may participate in which your
or our disclosure of its tax treatment or tax structure is limited by any person other than you, our
client, unless we are separately engaged by you for that purpose.
4. REGARDING CORPORATE TRANSPARENCY ACT. You are solely responsible
for complying with the Corporate Transparency Act ("CTA"), including any applicable
obligation to prepare, file and update any beneficial ownership information ("BOI") report that is
required to be filed with the Financial Crimes Enforcement Network ("FinCEN"). Unless
expressly engaged to do so in writing, Ballard Spahr has no obligation to notify any party of such
parry's obligations under the CTA or to prepare or file any BOI Report that is required to be filed
with FinCEN (the "BOI Report(s)"). Client understands it is solely responsible for compliance
with the CTA.
5. STAFFING. Customarily, each client of Ballard Spahr is served by a Relationship
Partner (a principal lawyer contact) and one or more Matter Billing Lawyers (a lawyer
designated to oversee an individual matter that Ballard Spahr handles on your behalf). Your
work or parts of it may be performed by other lawyers and legal assistants at Ballard Spahr.
Such delegation may be for the purpose of involving lawyers or legal assistants with special
expertise in a given area or for the purpose of providing services on the most efficient and timely
basis.
6. ELECTRONIC DISCOVERY. In matters involving electronic discovery, Ballard
Spahr will work closely with the client's representatives and agents to ensure that all tasks
associated with electronic discovery, including data preservation, data collection and processing,
are performed in accordance with relevant legal and ethical standards. You agree to facilitate
Ballard's management of electronic discovery by timely assigning relevant business, legal or IT
representatives, including retained vendors, to assist Ballard and its representatives as needed. If
you choose to use Ballard Spahr's electronic discovery system (Relativity®) for a given matter,
you will be charged unit prices for data hosting and data processing, as set forth in Section 10
and in the Disbursement Pricing Schedule, in addition to fees for any necessary Litigation
Support time.
7. TERMINATION OF ENGAGEMENT. Either of us may terminate the engagement at
any time for any reason by written notice, subject on our part to applicable rules of professional
conduct. Your termination of our services will not affect your responsibility for payment of legal
services rendered and additional charges incurred before termination and in connection with an
orderly transition of the matter. If permission for withdrawal is required by a court, we will
apply for such permission and you agree to engage successor counsel to represent you.
We are subject to the rules of professional responsibility for the jurisdictions in which we
practice, which list several types of conduct or circumstances that require or allow us to
2
withdraw from representing a client, including for example: nonpayment of fees or costs,
misrepresentation or failure to disclose material facts, action contrary to our advice, and conflict
of interest with another client. We try to identify in advance and discuss with our client any
situation which may lead to our withdrawal, and if withdrawal ever becomes necessary, we give
the client written notice of our withdrawal.
8. CONCLUSION OF REPRESENTATION. Unless previously terminated, our
representation will conclude upon our sending you our final invoice for services rendered in this
matter.
9. RETENTION AND DISPOSITION OF DOCUMENTS. Following the termination of
our representation or the conclusion of the matter, any otherwise nonpublic information you have
supplied to us which is retained by us will be kept confidential in accordance with applicable
rules of professional conduct. At your request, your papers and property will be returned to you
promptly upon receipt of payment for outstanding fees and costs. Our own files pertaining to the
matter will be retained by Ballard Spahr. These firm files include, for example, firm
administrative records, time and expense reports, personnel and staffing materials, and credit and
accounting records; and internal lawyers' work product such as drafts, notes, internal
memoranda, and legal and factual research, including investigative reports, prepared by or for the
internal use of lawyers. We reserve the right to destroy or otherwise dispose of any such
documents or other materials retained by us within a reasonable time after the termination of the
engagement.
10. POST -ENGAGEMENT ISSUES. You are engaging Ballard Spahr to provide legal
services in connection with the matter referred to in the accompanying engagement letter. After
completion of the matter, changes may occur in the applicable laws or regulations that could
have an impact upon your future rights and liabilities. Unless you engage us after completion of
the matter to provide additional advice on issues arising from the matter, Ballard Spahr has no
continuing obligation to advise you with respect to future legal developments.
11. FEES AND EXPENSES. Our fees will be based primarily on the amount of time spent
on your behalf. Each lawyer and legal assistant has an hourly billing rate based generally on
experience and special knowledge. The rate multiplied by the time expended on your behalf,
measured in tenths of an hour, will be the initial basis for determining the fee. The billing rates
for this matter are specifically discussed in the engagement letter. These billing rates are subject
to change from time to time. Other factors may be taken into consideration in determining our
fees including the responsibility assumed, the novelty and difficulty of the legal problem
involved, the skill required to perform the work, the particular experience or knowledge
provided, time limitations imposed by you or the transaction or matter, the benefit resulting to
you, and any unforeseen circumstances arising in the course of our representation.
We will include on our invoices separate charges for performing services and expenses such as
photocopying, messenger and delivery service, computerized research, travel, long-distance
telephone fees, faxing fees and electronic discovery fees, including data hosting and data
processing, in accordance with the attached Disbursement Pricing schedule. In litigation matters,
such expenses may also include deposition costs, process servers, court reporters and witness
fees. We may elect to have you billed directly for certain expenses such as consultants,
appraisers, and local counsel.
Invoices normally will be rendered monthly for work performed and expenses recorded on our
books during the previous month. Payment is due promptly upon receipt of our invoice.
Invoices rendered in December must be paid prior to the end of the year. If any invoice remains
unpaid for more than 30 days, we may suspend performing services for you and withdraw as
your counsel unless arrangements satisfactory to us have been made for payment of outstanding
invoices and the payment of future fees and expenses.
Fees and costs relating to this matter are not predictable. Accordingly, unless specifically stated
to the contrary in the engagement letter, we have made no commitment to you concerning the
maximum fees and costs that will be necessary to resolve or complete this matter. It is expressly
understood that payment of Ballard Spahr's fees and costs is in no way contingent on the
ultimate outcome of the matter.
12. RETAINER AND TRUST DEPOSITS. New clients of Ballard Spahr are commonly
asked to deposit a retainer. If you deposit a retainer with us, you grant us a security interest in
that deposit. Typically, the retainer is equal to the fees and costs likely to be incurred during a
one -month period. It will be deposited in our general trust account. The retainer will be applied
to our final billing in the matter and we will then return to you, without interest, any unearned
portion of the retainer.
All trust deposits we receive from you, including retainers, will be placed in a trust account for
your benefit. By court rule in each jurisdiction in which Ballard Spahr has an office, your deposit
will be placed in a pooled account unless you request otherwise or we judge it appropriate to
establish a segregated account. By court rule in each of these jurisdictions, interest earned on the
pooled account is payable to a charitable foundation established in accordance with such court
rule. Interest earned on any segregated trust account will be added to the deposit for your benefit
and will be includable in your taxable income.
13. CLIENT RESPONSIBILITIES. You agree to pay our invoices for services and
expenses in a timely manner as provided in paragraph ten, above. In addition, you will be candid
and cooperative with us and will keep us informed with complete and accurate factual
information, documents and other communications relevant to the subject matter of our
4
representation or otherwise reasonably requested by us. Because it is important that we are able
to contact you at all times in order to consult with you regarding your representation, you will
inform us, in writing, of any changes in the name, address, telephone number, contact person,
email address, state of incorporation or other relevant changes regarding you or your business.
Whenever we need your instructions or authorization in order to proceed with legal work on your
behalf, we will contact you at the latest business address we have received from you.
14. CONFLICTS OF INTEREST. Ballard Spahr represents many other companies and
individuals. It is possible that present or future clients of Ballard Spahr will have disputes or
transactions with you. For example, although we represent a bank in litigation, we may
concurrently have clients whom we represent in connection with obtaining a loan from the same
bank. You agree that we may continue to represent or may undertake in the future to represent
existing or new clients in any matter that is not substantially related to our work for you even if
the interests of such clients in those other matters are directly adverse. We agree, however, that
your prospective consent to conflicting representation contained in the preceding sentence shall
not apply in any instance where, as a result of our representation of you, we have obtained
proprietary or other confidential information of a nonpublic nature, that, if known to such other
client, could be used in any such other matter by such client to your material disadvantage. You
should know that, in similar engagement letters with many of our other clients, we have asked
for similar agreements to preserve our ability to represent you.
You will provide Ballard Spahr with a list of entities within your corporate or immediate
personal family. If you affiliate with, acquire, or are acquired by or merge with another
company, you will provide us with sufficient notice to permit us to withdraw as your attorneys if
we determine that such affiliation, acquisition or merger creates a conflict of interest between
any of our clients and the other party to such affiliation, acquisition or merger, or if we determine
that it is not in the best interests of Ballard Spahr to represent the new entity.
You have agreed that our representation of you in the matter described in the engagement letter
does not create an attorney -client relationship between Ballard Spahr and other entities in your
personal or corporate family. Accordingly, our representation of you in the matter identified in
the engagement letter will not give rise to any conflict of interest in the event other clients of
Ballard Spahr are adverse to members of your personal or corporate family.
Ballard Spahr LLP
2024
Disbursement Pricing
Disbursement
Cost
Ballard Spahr Messenger
No Charge
Binding
No Charge
Cab Fares/Ride Share Services
Actual Cost
Courier Service
Actual Cost
Data Hosting
$12 p/gb per month
Data Processing
No Charge
Document Production
No Charge
Duplicating
Duplicating (Color)
Outside Duplicating
$0.10 per page
$0.15 per page
Invoice Cost
Fax (Outgoing Only)
No Charge
Lexis and Westlaw
Actual (discounted) Cost
Library Research Services
Published Standard Cost
Long Distance Telephone
No Charge
Overtime
No Charge
Postage
No Charge (Stanard USPS First
Class under $25)
Actual Cost (Standard USPS
First Class over $25, Certified,
Registered, Insurance, USPS
Priority and Overnight Express)
State Department Services
No Charge
Telephone (Credit Card Calls)
No Charge
Travel
Actual Cost