HomeMy WebLinkAboutContracts & Agreements_63-2021AGREEMENT TO PERFORM PROFESSIONAL SERVICES
This agreement for the provision of municipal advisory services ("Agreement") is made
and entered in this 20th day of April, 2021 ("Effective Date"), by and between the City of
Redlands, a municipal corporation ("City") and KNN Public Finance, a Limited Liability
Company. ("Consultant"). City and Consultant are sometimes individually referred to herein as a
"Party" and, together, as the "Parties." In consideration of the mutual promises contained herein,
City and Consultant agree as follows:
ARTICLE 1 — ENGAGEMENT OF CONSULTANT
1.1 City hereby engages Consultant to provide municipal finance consulting services for City
(the "Services").
1.2 The Services shall be performed by Consultant in a professional manner, and Consultant
represents that it has the skill and the professional expertise necessary to provide the
Services to City at a level of competency presently maintained by other practicing
professional consultants in the industry providing like and similar types of Services.
ARTICLE 2 — SERVICES OF CONSULTANT
2.1 The Services that Consultant shall perform are more particularly described in Exhibit
"A," titled "Scope of Services," which is attached hereto and incorporated herein by
reference.
2.2 Consultant shall comply with applicable federal, state and local laws and regulations in
the performance of this Agreement including, but not limited to, any applicable State
prevailing wage laws.
ARTICLE 3 — RESPONSIBILITIES OF CITY
3.1 City designates Danielle Garcia, Management Services and Finance Director, as City's
representative with respect to performance of the Services, and such person shall have the
authority to transmit instructions, receive information, interpret and define City's policies
and decisions with respect to performance of the Services.
ARTICLE 4 — PERFORMANCE OF SERVICES
4.1 Consultant shall perform and complete the Services in a prompt and diligent manner. The
initial term of this Agreement shall be for a period of three (3) years from the Effective
Date of this Agreement (the "Initial Term"). The City shall have the option to extend the
Initial Term of this Agreement by two (2), additional, one-year terms (each, an "Extended
Term"), on the same terms and conditions hereof, by providing written notice to
Consultant at least thirty (30) days prior to the expiration of the Initial Term or any
Extended Term. The Initial Term and any Extended Terms are collectively defined to
herein as the "Term" of this Agreement.
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4.2 If Consultant's Services include deliverable electronic visual presentation materials, such
materials shall be delivered in a form, and made available to the City, consistent with
City Council adopted policy for the same. It shall be the obligation of Consultant to
obtain a copy of such policy from City staff.
ARTICLE 5 — PAYMENTS TO CONSULTANT
5.1 The total compensation for Consultant's performance of the Services shall not exceed
two hundred and fifty thousand ($250,000) during the Term of this Agreement. City shall
pay Consultant on a time and materials basis, up to the not to exceed amount, in
accordance with Exhibit "B," titled "Fee Schedule Title," which is attached hereto and
incorporated herein by this reference.
5.2 Consultant shall submit monthly invoices to City describing the Services performed
during the preceding month. Consultant's invoices shall include a brief description of the
Services performed, the dates the Services were performed, the number of hours spent
and by whom, and a description of reimbursable expenses related to the Services. City
shall pay Consultant no later than thirty (30) days after receipt and approval by City of
Consultant's invoice.
5.3 Any notice or other communication required, or which may be given, pursuant to this
Agreement, shall be in writing. Any such notice shall be deemed delivered (i) on the date
of delivery in person; (ii) five (5) days after deposit in first class registered mail, with
return receipt requested; (iii) on the actual delivery date if deposited with an overnight
courier; or (iv) on the date sent by facsimile, if confirmed with a copy sent
contemporaneously by first class, certified, registered or express mail; in each case
properly posted and fully prepaid to the appropriate address set forth below, or such other
address as a Party may provide notice in accordance with this section:
CITY:
City Clerk
City of Redlands
35 Cajon Street
P.O. Box 3005 (mailing)
Redlands, CA 92373
jdonaldson@cityofredlands.org
Phone: (909) 798-7531
CONSULTANT:
Mark T. Young, Managing Director
KNN Public Finance, LLC
5901 W. Century Blvd., Suite 750
Los Angeles, CA 90045
myoung@knninc. coni
Phone: 310-348-2901
ARTICLE 6 — INSURANCE AND INDEMNIFICATION
6.1 The following insurance coverage required by this Agreement shall be maintained by
Consultant for the duration of its performance of the Services. Consultant shall not
perform any Services unless and until the required insurance listed below is obtained by
Consultant. Consultant shall provide City with certificates of insurance and endorsements
evidencing such insurance prior to commencement of the Services. Insurance policies
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shall include a provision prohibiting cancellation or modification of the policy except
upon thirty (30) days prior written notice to City.
A. Workers' Compensation and Employer's Liability insurance in the amount that meets
statutory requirements with an insurance carrier acceptable to City, or certification to
City that Consultant is self -insured or exempt from the workers' compensation laws
of the State of California. Consultant shall execute and provide City with Exhibit "C,"
titled "Workers' Compensation Insurance Certification," which is attached hereto and
incorporated herein by this reference, prior to performance of the Services.
B. Comprehensive General Liability insurance with carriers acceptable to City in the
minimum amount of One Million Dollars ($1,000,000) per occurrence and Two
Million Dollars ($2,000,000) aggregate, for public liability, property damage and
personal injury is required. City shall be named as an additional insured and such
insurance shall be primary and non-contributing to any insurance or self-insurance
maintained by City.
C. Business Auto Liability coverage, with minimum limits of One Million Dollars
($1,000,000) per occurrence, combined single limit bodily injury liability and
property damage liability. This coverage shall include all Consultant owned vehicles
used in connection with Consultant's provision of the Services, hired and non -owned
vehicles, and employee non -ownership vehicles. City shall be named as an additional
insured and such insurance shall be primary and non-contributing to any insurance or
self-insurance maintained by City.
D. Consultant is expressly prohibited from assigning or subcontracting any of the
Services without the prior written consent of City. In the event of mutual agreement
by the Parties to assign or subcontract a portion of the Services, Consultant shall add
such assignee or subcontractor as an additional insured to the insurance policies
required hereby and provide City with the insurance endorsements prior to any
Services being performed by the assignee or subcontractor.
6.2 Consultant shall defend, indemnify and hold harmless City and its elected officials,
employees and agents from and against any and all claims, losses or liability, including
attorneys' fees, arising from injury or death to persons or damage to property occasioned
by any negligent act or omission by, or the willful misconduct of, Consultant, or its
officers, employees and agents in performing the Services.
ARTICLE 7 — CONFLICTS OF INTEREST
7.1 Consultant covenants and represents that it does not have any investment or interest in
any real property that may be the subject of this Agreement or any other source of
income, interest in real property or investment that would be affected in any manner or
degree by the performance of Consultant's Services. Consultant further covenants and
represents that in the performance of its duties hereunder, no person having any such
interest shall perform any Services under this Agreement.
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7.2 Consultant agrees it is not a designated employee within the meaning of the Political
Reform Act because Consultant:
A. Does not make a governmental decision whether to:
(i) approve a rate, rule or regulation, or adopt or enforce a City law;
(ii) issue, deny, suspend or revoke any City permit, license, application,
certification, approval, order or similar authorization or entitlement;
(iii) authorize City to enter into, modify or renew a contract;
(iv) grant City approval to a contract that requires City approval and to which
City is a party, or to the specifications for such a contract;
(v) grant City approval to a plan, design, report, study or similar item;
(vi) adopt, or grant City approval of, policies, standards or guidelines for City
or for any subdivision thereof.
B. Does not serve in a staff capacity with City and in that capacity, participate in
making a governmental decision or otherwise perform the same or substantially
the same duties for City that would otherwise be performed by an individual
holding a position specified in City's Conflict of Interest Code under Government
Code section 87302.
7.3 In the event City determines that Consultant must disclose its financial interests,
Consultant shall complete and file a Fair Political Practices Commission Form 700,
Statement of Economic Interests, with the City Clerk's office pursuant to the written
instructions provided by the City Clerk.
7.4 Consultant's regulatory disclosures are provided as an Exhibit "D."
ARTICLE 8 — GENERAL CONSIDERATIONS
8.1 In the event any action is commenced to enforce or interpret any of the terms or
conditions of this Agreement the prevailing Party shall, in addition to any costs and other
relief, be entitled to the recovery of its reasonable attorneys' fees, including fees for the
use of in-house counsel by a Party.
8.2 Consultant shall not assign any of the Services, except with the prior written approval of
City and in strict compliance with the terms and conditions of this Agreement. Any
assignment or attempted assignment without such prior written consent may, in the sole
discretion of City, result in City's immediate termination of this Agreement.
8.3 Consultant is for all purposes under this Agreement an independent contractor and shall
perform the Services as an independent contractor. Neither City nor any its agents shall
have control over the conduct of Consultant or Consultant's employees, except as herein
set forth. Consultant shall supply all necessary tools and instrumentalities required to
perform the Services. Assigned personnel employed by Consultant are for its account
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only, and in no event shall Consultant or personnel retained by it be deemed to have been
employed by City or engaged by City for the account of, or on behalf of City. Consultant
shall have no authority, express or implied, to act on behalf of City in any capacity
whatsoever as an agent, nor shall Consultant have any authority, express or implied, to
bind City to any obligation.
8.4 This Agreement may be terminated by City, in its sole discretion, by providing not less
than five (5) days prior written notice to Consultant of City's intent to terminate. If this
Agreement is terminated by City, an adjustment to Consultant's compensation shall be
made, but (1) no amount shall be allowed for anticipated profit or unperformed Services,
and (2) any payment due Consultant at the time of termination may be adjusted to the
extent of any additional costs to City occasioned by any default by Consultant. Upon
receipt of a termination notice, Consultant shall immediately discontinue its provision of
the Services and, within five (5) days of the date of the termination notice, deliver or
otherwise make available to City, copies (in both hard copy and electronic form, where
applicable) of project related data, design calculations, drawings, specifications, reports,
estimates, summaries and such other information and materials as may have been
accumulated by Consultant in performing the Services. Consultant shall be compensated
on a pro-rata basis for Services completed up to the date of termination.
8.5 Consultant shall maintain books, ledgers, invoices, accounts and other records and
documents evidencing costs and expenses related to the Services for a period of three (3)
years, or for any longer period required by law, from the date of final payment to
Consultant pursuant to this Agreement. Such books shall be available at reasonable times
for examination by City at the office of Consultant.
8.6 This Agreement, including the Exhibits incorporated herein by reference, represents the
entire agreement and understanding between the Parties as to the matters contained
herein, and any prior negotiations, written proposals or verbal agreements relating to such
matters are superseded by this Agreement. Except as otherwise provided for herein, any
amendment to this Agreement shall be in writing, approved by City and signed by City
and Consultant.
8.7 This Agreement shall be governed by and construed in accordance with the laws of the
State of California.
8.8 If one or more of the sentences, clauses, paragraphs or sections contained in this
Agreement is declared invalid, void or unenforceable by a court of competent
jurisdiction, the same shall be deemed severable from the remainder of this Agreement
and shall not affect, impair or invalidate the remaining sentences, clauses, paragraphs or
sections contained herein, unless to do so would deprive a Party of a material benefit of
its bargain under this Agreement.
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IN WITNESS WHEREOF, duly authorized representatives of City and Consultant have
signed in confirmation of this Agreement.
CITY OF REDLAN9 S KNN PUBLIC FINANCE, LLC
By: e By:
Paul T. Barich, Mayor Mark T. Y ung, anagin Director
ATTEST:
aAO'56'd�
e ne Donaldson, City Clerk
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EXHIBIT "A"
SCOPE OF SERVICES
Overview
Consultant will act as an independent Municipal Advisor and economic market expert, and
provide financial advice and analysis, and assist on debt issuance, structuring, timing of issuance,
call provision options, rating matters, and on existing and proposed financial arrangements on an
as -needed basis. The Municipal Advisor may also be called upon to provide municipal advisory
services during the course of the fiscal year for other financings that the City may undertake as
well as any other 'on call' advisory services including but not limited to strategic planning,
capital project analysis, and financial alternatives.
Specifically, the municipal advisor may, on an as -needed basis, perform the following services:
General Financial Assistance
• Work with City staff to review and provide advice on operational budgets and funding
plans.
• Assist in appropriate continuing disclosure process for some or all of the City's
outstanding obligations requiring annual filings and event notices.
• Review and assist staff in responding to general questions related to public finance.
• Assist staff with reports or information items relating to financing strategies or
opportunities.
• Respond to general inquiries from staff.
Planning
• In coordination with City staff, prepare a Five -Year Financial Plan to identify known
and/or anticipated factors that may have a significant effect on the City's General Fund
spending.
• Develop and recommend financing structure options, including the preparation of
financing plans and analyses.
• Perform special projects, including assisting debt structuring & debt affordability
analysis.
• Provide information, judgements, and forecasts regarding economic, capital market and
money market conditions as applicable to the City's ability to borrow money.
• Provide continuing updates and advice on the impact of current or proposed state or
federal legislation and market conditions that could affect the City's financial plans.
• Prepare analytical data and/or projections related to internal evaluations of capital
projects and City liabilities including outstanding indebtedness.
• Assist in developing capital financing plans for equipment and other assets.
• Develop financial analyses and special reports as requested.
• Work with City to determine budget and tax impact of bonding scenarios, debt capacity
analysis, and credit benchmarks.
• Work with City to update its debt policy to reflect new debt, plans, and market changes.
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Debt Strategy
• Develop and recommend financing structure options, including the preparation of
financing plans and analyses.
• Develop rating agency strategy, prepare rating agency presentation material, schedule
meetings with rating agencies, organize and coordinate Council and staff rehearsals and
presentations, coordinate itinerary for rating agency visits as required.
• Review and evaluate the City's existing capital financing plans and work closely with the
Director to review any borrowing strategies included therein.
• Assist with new revenue/refunding bond issuances, evaluate financing structure, pricing,
rating and reserve requirements, formulate relevant forecasts and quantitative models.
• Serve as the City's bond market expert, including tax-exempt and taxable markets, fixed
rate and variable markets, and provide ongoing analysis of current and upcoming trends
and events in these and related areas.
• Periodically monitor outstanding debt issues for refunding opportunities, update staff and
executive management on findings and advise when and when not to issue refunding
bonds based on savings analysis and market trends.
• Advise on methods of debt sales (where appropriate).
• Provide advice on approaches to ratings and assist with rating presentations and the
preparation of the presentation.
• Assist in preparing and reviewing documents, including preliminary and final official
statements.
• Conduct pre -marketing of issues (competitive sale).
• Evaluate bids, including accuracy of TIC calculation, and recommend award (competitive
sale).
• Review pricing, underwriter roles, and allocation of bonds (negotiated sale).
• Coordinate closing arrangements with the City, bond counsel and underwriter.
• Assist the Director in coordinating receipt and disbursement of funds on the settlement
date.
• Provide advice on investment of bond proceeds and compliance with arbitrage
regulations, and guidance on post -issuance compliance.
• Prepare and update a debt amortization schedule for new and existing debt at the request
of the Director.
• Assist the City in securing, or providing, Paying Agent services for bonds and notes.
• Assist the City in preparing and managing the procurement of other debt -related services
as needed.
• Should circumstances require municipal bond insurance, assist the City in coverage
qualification and, if necessary, making presentations to municipal bond insurance
companies. Analyze premium costs and the impact on the financing rate.
Policy Development
• Assist staff by evaluating program proposals or changes in policy.
• Review of practices and policies and recommended steps that can be taken to improve
city's fiscal health and programs.
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• Assist with benchmarking against other municipalities.
• Coordinate relationship with rating agencies.
Bond Sales
• Coordinate the tasks, responsibilities, and dates for completing activities leading up to a
bond sale with the City's financing team;
• Assist the City in preparing and managing the procurement of other financing members
as needed.
• Attend in person or by phone all organizational, document review, and special meetings
related to a bond financing;
• Evaluate, advise, and consult with the City and bond counsel regarding financial and non-
financial bond covenants of the bond issue;
• Assist in furnishing materials / data to rating agencies, bond insurers, and letter of credit
providers;
• Assist in structuring bond transactions;
• Assist in team discussions in conjunction with bond counsel on form, content, and
sufficiency of information in the preliminary and final official statements;
• Assist in preparing preliminary and final official statements in conjunction with bond
counsel;
• Coordinate paying agent, escrow, advertising, and any other services necessary for the
bond sale;
• Provide advice on approaches to ratings and facilitate the presentations to ratings
agencies; and
• Evaluate the use and obtain bids for credit enhancements, when appropriate.
Competitive Sales
• Coordination of pre -sale publicity, call for bids, evaluation of bids, recommendations
regarding sufficiency of bids and awarding of bonds.
Negotiated Sales
• Coordinate pricing meetings and offerings of negotiated issues;
• Recommend structure of underwriting teams; i.e., co -managers, selling group, syndicate,
etc.;
• Recommend timing of bond pricing; and
• Review, monitor and advise the City regarding proposed negotiated interest rates, spreads
and underwriter compensation.
Bond Closing
• Prepare closing memorandum with bond counsel to confirm activities at the closing and
role of each party;
• Assist in evaluating the investment of bond proceeds (where applicable) for construction
fund, debt service, fund, escrow, etc.; and
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• Assist with the allocation of debt service principal and interest from a bond sale to the
underlying borrowings at high level.
Public Meetings
• Prepare and deliver presentations designed to facilitate an understanding of public sector
financing and its implications to public officials and residents.
Post -Issuance Assistance
• Review the City's CAFR for adequacy of meeting continuing disclosure requirements;
• Assist in appropriate continuing disclosure process for some or all of the City's
outstanding obligations requiring annual filings and event notices;
• Provide advice related to compliance with arbitrage regulations.
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EXHIBIT "B"
FEE SCHEDULE
Consultant's fees for such Services will be based upon the following hourly rates schedule:
Title
Hourly Fee*
Managing Director
$345
Director
$325
Vice President
$295
Assistant Vice President
$275
Associate
$245
Analyst
$205
*Subject to annual increases not -to -exceed 3% a year with
written approval from the City.
The following fixed transactions fees for debt offerings are separate from the hourly
compensation capped annually at $50,000 and will be billed in the event the City requires these
services. Fixed transaction fees, including reimbursement of out-of-pocket expenses, are payable
from bond proceeds and contingent on the closing of a transaction.
Transaction Type
Fee Range
General Obligation Bonds
$35,000 - $60,000
Lease Revenue Bonds or COPS
$35,000 - $60,000
Enterprise Revenue Bonds
WOO - $605000
Refunding Tax Allocation Bonds
$405000 - $655000
Special Assessment Bonds
WOO - $7000
Mello -Roos Bonds
WOO - $7000
Pension Obligation Bonds
WOO - $80,000
Reimbursement for a limited number of out-of-pocket expenses, such as conference call services,
color copying and statistical data obtained from outside sources, as well as air travel and hotels if
necessary, will be capped at $2,500.
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EXHIBIT ffcft
WORKERS' COMPENSATION INSURANCE CERTIFICATION
Every employer, except the State, shall secure the payment of compensation in one or more of
the following ways:
(a) By being insured against liability to pay compensation by one or more insurers
duly authorized to write compensation insurance in this State.
(b) By securing 'from the Director of Industrial Relations, a certificate of consent to
self -insure, either as an individual employer, or as one employer in a group of
employers, which may be given upon furnishing proof satisfactory to the Director
of Industrial Relations of ability to self -insure and to pay any compensation that
may become due to his or her employees.
CHECK ONE
am aware of the provisions of Section 3700 of the Labor Code which requires every
employer to be insured against liability for Workers' Compensation or to undertake self-
insurance in accordance with the provisions of that Code, and I will comply with such provisions
before commencing the perfoti-nance of the work and activities required or permitted Linder this
Agreement. (Labor Code § 1861).
I affirm that at all times, in performing the work and activities required or permitted Linder
this Agreement, I shall not em.ploy any person in any mariner such that I become subject to the
workers' compensation laws of California. However. at any time, if I employ any person Such
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that I become subject to the workers" compensation laws of California, immediately I shall
provide the City with a certificate of consent to self -insure, or a, certification of workers'
compensation insurance.
I certify under penalty of perjury under the laws of the State of California that the information
and representations made in this certificate are true and correct.
KNN PUBLIC FINANCE LLC
By:
Mark T. Young,. V-kh"naarnv Director
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Date: /z i
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EXHIBIT "D"
Disclosures Pursuant to MSRB Rules G-42 and G-10
Pursuant to Municipal Securities Rulemaking Board ("MSRB") Rule G-42, on Duties on Non -
Solicitor Municipal Advisors, Municipal Advisors are required to make certain written
disclosures to clients which include, amongst other things, Conflicts of Interest and any Legal or
Disciplinary Events of KNN Public Finance, LLC ("KNN Public Finance") and its associated
persons.
Conflicts of Interest
Other Municipal Advisor Relationships. KNN serves a wide variety of other clients that may
from time to time have interests that could have a direct or indirect impact on the interests of
another KNN client. For example, KNN serves as municipal advisor to other municipal advisory
clients and, in such cases, owes a regulatory duty to such other clients just as it will to your
entity, if hired. These other clients may, from time to time and depending on the specific
circumstances, have competing interests. In acting in the interests of its various clients, KNN
could potentially face a conflict of interest arising from these competing client interests. KNN
fulfills its regulatory duty and mitigates such conflicts through dealing honestly and with the
utmost good faith with its clients.
Compensation. KNN Public Finance represents that in connection with the issuance of municipal
securities, KNN Public Finance may receive compensation from an Issuer or Obligated Person
for services rendered, which compensation is contingent upon the successful closing of a
transaction and/or is based on the size of a transaction. Consistent with the requirements of
MSRB Rule G-42, KNN Public Finance hereby discloses that such contingent and/or
transactional compensation may present a potential conflict of interest regarding KNN Public
Finance's ability to provide unbiased advice to enter into such transaction. This conflict of
interest will not impair KNN Public Finance's ability to render unbiased and competent advice or
to fulfill its fiduciary duty to the Issuer.
If KNN Public Finance becomes aware of any additional potential or actual conflict of interest
after this disclosure, KNN Public Finance will disclose the detailed information in writing to the
Issuer in a timely manner.
Legal or Disciplinary Events
KNN Public Finance, LLC, has never been subject to any legal, disciplinary or regulatory actions
nor was it ever subject to any legal, disciplinary or regulatory actions previously, when it was a
division of Zions First National Bank or Zions Public Finance, Inc.
A regulatory action disclosure has been made on Form MA -I for one of KNN's municipal
advisory personnel relating to a 1998 U.S. Securities and Exchange Commission ("SEC") order
that was filed while the municipal advisor was employed with a prior firm, (not KNN Public
Finance). The details of which are available in Item 9; C(1), C(2), C(4), C(5) and the
corresponding regulatory action DRP section on Form MA and Item 6C; (1), (2), (4), (5) and the
corresponding regulatory action DRP section on Form MA -I. Issuers may electronically access
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KNN Public Finance's most recent Form MA and each most recent Form MA -I filed with the
Commission at the following website: www.sec.aov/ed(yar/searclied ar/coin San searcli.11tnit.
The SEC permits certain items of information required on Form MA and Form MA -I to be
provided by reference to such required information already filed on a regulatory system (e.g.,
FINRA CRD). The above noted regulatory action has been referenced on both Form MA and
MA -I due to the information already filed on FINRA's CRD system and is publicly accessible
through BrokerCheck at htt ://brokercli.eck..li.nra.or y. For purposes of accessing such
BrokerCheck information, the Municipal Advisor's CRD number is 4457537.
There has been no change to any legal or disciplinary event that has been disclosed on KNN
Public Finance's original SEC registration Form MA filed on February 8, 2016 or Form MA-I's
filed on January 22, 2016.
Additional Disclosures - MSRB Rule G-10
Pursuant to Municipal Securities Rulemaking Board Rule G-10, on Investor and Municipal
Advisory Client Education and Protection, Municipal Advisors are required to provide certain
written information to their municipal entity and obligated person clients which include the
following:
a) KNN Public Finance, LLC is currently registered as a Municipal Advisor with the U.S.
Securities and Exchange Commission and the Municipal Securities Rulemaking Board.
b) Within the Municipal Securities Rulemaking Board ("MSRB") website at www.nisrb.org,
City of Redlands may obtain the Municipal Advisory client brochure that is posted on the
MSRB website. The brochure describes the protections that may be provided by the
MSRB Rules along with how to file a complaint with financial regulatory authorities.
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