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Home My WebLink AboutOrdinance 11394 ORDINANCE NO AN ORDINANCE INCREASING THE ESTIMATED RECEIPTS AND APPROPRIATIONS IN THE SPECIAL TRUST FUND IN THE AMOUNT OF $2.395 MILLION FOR THE PURPOSE OF FUNDING THE 10% CONTINGENCY FEE IN CITY SECRETARY CONTRACT NO 19507, MAKING THIS ORDINANCE CUMULATIVE OF PRIOR ORDINANCES AND REPEALING ALL PRIOR ORDINANCES IN CONFLICT HEREWITH, AND PROVIDING AN EFFECTIVE DATE. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FORT WORTH, TEXAS SECTION 1 That in addition to those amounts allocated to the various City departments for the Fiscal Year 1992-93 and in the Budget of the City Manager, there shall also be increased estimated receipts and appropriations in the Special Trust Fund in the amount of $2.395 Million for the purpose of funding the 10% contingency fee in City Secretary Contract No 19507, a professional services contract with the law firm of Pepper, Hamilton and Scheetz and the rail consulting firm of Mercer Management. SECTION 2. Should any portion, section or part of a section of this ordinance be declared invalid, inoperative or void for any reason by a court of competent jurisdiction, such decision, opinion or judgment shall in no way impair the remaining portions, sections, or parts of sections of this ordinance, which said remaining provisions shall be and remain in full force and effect. SECTION 3 That this ordinance shall be cumulative of Ordinance No 11151 and all other ordinances and appropriations amending the same except in those instances where the provisions of this ordinance are in direct conflict with such other ordinances and appropriations, in which instance said conflicting provisions of said prior ordinances and appropriations are hereby expressly repealed. SECTION 4 This ordinance shall take effect and be ih full force and effect from and after the date of its passage, and it is so ordained APPROVED AS TO FORM AND LEGALITY a City Attorney -~I-~3 Date ~) ~~~ Adopted ~~~~ Effective ,. City of Fort Worth, Texas Mayor and Council Communication REFERENCE NUMBER LOG NAME PAGE 08/31 /93 C-13981 02RAILTN 1 of 3 SUBJECT DFW RAILTRAN SYSTEM SUPPLEMENTAL APPROPRIATION FOR PROFESSIONAL SERVICES CONTRACT NO 19507 WITH PEPPER, HAMILTON & SCHEETZ, LAW FIRM, AND MERCER MANAGEMENT CONSULTING, RAIL CONSULTANTS RECOMMENDATION. It is recommended that the City Council 1 Adopt the attached supplemental appropriations ordinance increasing estimated receipts and appropriations by S2 395 million in the Special Trust Fund, and 2 Authorize the expenditure of 52 395 million for payment to Pepper, Hamilton and Scheetz (Pepper) of the 10% contingency fee in City Secretary Contract No 19507, a professional services contract with the law firm of Pepper, Hamilton and Scheetz and the rail consulting firm of Mercer Management DISCUSSION On June 16, 1992, the City Council approved City Secretary Contract No 19507 with Pepper, Hamilton and Scheetz (Pepper) to continue negotiations with the Union Pacific Railroad and the Burlington Northern Railroad for operating rights over the RAILTRAN corridor Through these negotiations, the Cities sought to accomplish two fundamental goals (1) to secure rights necessary to operate and control commuter rail service between the Cities, and, (2) to maintain at least the current cash flows from the existing agreements with the freight railroads If Pepper achieved only this "baseline success," no contingency fee would be paid If, however, Pepper delivered agreements which secured the rights necessary and increased the cash flows to the Cities, they would be entitled to a 10% contingency fee based on the amount of the increased value after all fees and expenses had been subtracted By so computing the contingency fee, the Cities, in effect, would be fully reimbursed for all legal fees and expenses before sharing any net benefit with Pepper Pepper was successful in the negotiations, and the new agreements represent a substantial increase in net benefit to the Cities The following is a comparison of the present value of the existing agreements and the new agreements BN NET RENTAL (Amounts are in millions) UP NET RENTAL UP & BN NET RENTAL Agreements New Agreements 51 8 S16 1 7_0 2^5 588 5186 SN & UP Capital Expenditure Contribution 50.0 S 1 1.6 Total Present Value (Rental and Capital Expenditure Contribution) 58 8 _ S30 2 -~1 Printed on recycled paper }~ City of Fort Worth, Texas Mayor and Council Camrxmunication DATE REFERENCE NUMBER LOG NAME PAGE 08/31 /93 C-13981 02RAILTN 2 of 3 SUBJECT DFW RAILTRAN SYSTEM SUPPLEMENTAL APPROPRIATION FOR PROFESSIONAL SERVICES CONTRACT NO 19507 WITH PEPPER, HAMILTON & SCHEETZ, LAW FIRM, AND MERCER MANAGEMENT CONSULTING, RAIL CONSULTANTS Net Benefit Increase of New Agreements Compared to Existing Agreements New Agreements Existing Agreements 5 30 2 - 8.8 5214 Under this contract the Cities also agreed to add 52 million to the net benefit of the new agreement to account, in part, for the negotiated elimination of Union Pacific's initial demand, as a precondition to negotiations, for the return of the rentals it paid the Cities following the Cities' refusal to execute the Purchase Agreement Between the MKT (UP) and Dallas Area Rapid Transit, dated November 3, 1989, totalling, at that time, 54 8 million, therefore, making the total net benefit of the new agreements 523 4 million As of July 28, 1993, 5801,000 has been expended for fees and expenses in connection with these negotiations Another 5150,000 is expected to complete the necessary Interstate Commerce Commission (ICC) filing which is included as an adjustment to the Scope of Services, making a total of 5950,000 rounded to the nearest thousand Per the contract, this is subtracted from the net benefit of the new agreement, leaving an adjusted net benefit of 522,450,000 The 10% contingency fee based on this amount equals 52 245 million The total amount to be paid to Pepper, after the estimated fees of 5150,000 to cover the ICC filing are added, equals 52 395 million Therefore, it is recommended that the Council approve a supplemental appropriation in the amount of 52 395 million The contingency fee, according to the contract, is to be paid in phases (1) upon presentation of the agreements, Pepper is entitled to the lesser of 25% of the contingency fee or an amount equal to it's unpaid hourly fees and expenses; (2) upon execution of the new agreements, Pepper will receive the amount when added to Phase 1 above would equal 50% of the total contingency fee, and (3) thereafter, annually Pepper will receive an installment on the remainder of the contingency fee as the net benefits are realized .Each annual installment payment shall equal the amount by which benefits actually received from the freight railroads exceed the benefits which would have been received if the prior agreements had remained in place All amounts to be paid under this supplemental appropriation will come from the RAILTRAN Special Trust Fund, which is composed of revenues derived from the operation of the RAILTRAN corridor The primary revenue source is rent from the freight users of the corridor ~=w~ Printed on recycled paper :~ City of Fort Worth, Texas Mayor and Council Communication DATE 08/31 /93 REFERENCE NUMBER C-13981 LOG NAME 02RAILTN PAGE 3 of 3 SUBJECT DFW RAILTRAN SYSTEM SUPPLEMENTAL APPROPRIATION FOR PROFESSIONAL SERVICES CONTRACT NO 19507 WITH PEPPER, HAMILTON & SCHEETZ, LAW FIRM, AND MERCER MANAGEMENT CONSULTING, RAIL CONSULTANTS No city funds are required for this expenditure The City of Dallas/RAILTRAN reimburses the City of Fort Worth for actual expenditures incurred FISCAL INFORMATION/CERTIFICATION. The Director of Fiscal Services certifies that upon approval and completion of attached appropriations ordinance, sufficient funds will be available in the current operating budget, of the Special Trust Fund The RAILTRAN office is responsible for the collection and depositing of funds from the City of Dallas/RAILTRAN BT a Submitted for City Manager's FUND ACCOUNT CENTER AMOUNT CITY SECRETARY Office by: (~o) (1) FE72 488413 00251409300 $2,395,000.00 ' Charles Boswell 8500 (1) FE72 531200 00251409300 2,395,000.00 AE PR® ~ED Originating Departrnent Head: ,CITY Ga~~GE~. Lisa Pyles 6123 (from) Cls U p a+~ ~ `~ ,~ ~99~ (2) FE72 531200 002514093000 g S ,CQ~r For Additional Information 7 ~ ~ -~.J Gcc~a.eJ Contact: City Ss~ca~tary of 6]1~t City oI Farl Worth, °Cor„an Lisa Pyles 6123 A(~ )p~P(~ ~i l~i~cl~i~~ ~i.l, ~ ~ %~/ +=«+ Printed on recycled paper