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HomeMy WebLinkAbout2000-09-06 Agenda Packet - Board (10) Staff Report To: Board of Directors From: Peter L. Holzmeister Date: September 1, 2000 DONNER LAKE WATER SYSTEM This agenda item continues the items that were begun at the special meeting on August 28, 2000. At that meeting, we began to assemble the team of experts who will help us analyze acquisition of the Donner Lake water system. To complete the team we need to retain an attorney and an engineer specializing in assessment district formation, and an engineer to perform services related to system acquisition. A. CONSIDERATION OF RETAINING ASSESSMENT DISTRICT COUNSEL: We have proposals from Sam Sperry of Orrick, Herringtom & Sutcliffe, and from David Casnocha of Stradling Yocca Carlson & Rauth. We worked with Sam Sperry several years ago regarding the Farmers Home Administration loan, and we have been working more recently with David Casnocha. Their proposals are attached for your review. The fee quoted by David Casnocha is considerably less than that quoted by Sam Sperry. I think both are highly qualified. I suggest we retain David Casnocha. RECOMMENDATION: I recommend that the Board accept the proposal from David Casnocha of Stradling Yocca Carlson & Rauth to perform services related to assessment district formation for Donner Lake water system at a fee not to exceed$15,000 without prior approval of the Board B. CONSIDERATION OF RETAINING ASSESSMENT DISTRICT ENGINEER: I have a proposal from Terrance Lowell & Associates. We have worked with Terry before and have great confidence in his abilities. He has significant knowledge and experience in assessment district engineering. RECOMMENDATION: I recommend that the Board accept the proposal of Terrance Lowell & Associates. C. CONSIDERATION OF RETAINING A CONSULTING ENGINEER TO PERFORM SERVICES RELATED TO SYSTEM ACQUISITION: I have proposals from Terrance Lowell & Associates and from a team put together by Rick Lind. Again, we are familiar with the work of Terry Lowell and have great confidence in him. We are not familiar with Rick Lind, although he comes highly recommended by Dennis DeCuir. I believe that working with Terry Lowell would help us coordinate work, and I 0 Page 1 am therefore recommending that we retain Terry to perform this work. I have spoken with Dennis DeCuir and David Casnocha, and both are willing to work closely with Terry. RECOMMENDATION: I recommend that the Board retain Terrance Lowell & Associated to perform engineering related to acquisition of the Donner Lake water system. 0 Page 2 Peter Holzmeister From: Sperry, Sam (SAMSPERRY@Orrick.com] Sent: Tuesday, August 29, 2000 11:22 AM To: 'peterholzmeister@tdpud.org' Subject: Legal Services Agreement-Truckee Donner PUD.DOC <<Legal Services Agreement-Truckee Donner PUD.DOC>> Peter, Later than I had intended, here is our proposed legal services agreement for the assessment proceedings, with both the legal fees and reimbursement of expenses contingent upon completion of the financing program either by (a) sale of bonds or(b) receipt of loan proceeds from the DWR revolving loan program. I would have had this to you last night, except I ran into a formatting problem which I didn't know how to handle, so waited for help this morning. I look forward to working with you on this program. Don't hesitate to call me at(415) 773-5467 or e-mail me at "samsperryp_orrick.com" if you have questions or comments on this proposed agreement. Regards, Sam NOTICE TO RECIPIENT: THIS E-MAIL IS MEANT FOR ONLY THE INTENDED RECIPIENT OF THE TRANSMISSION, AND MAY BE A COMMUNICATION PRIVILEGED BY LAW. IF YOU RECEIVED THIS E-MAIL IN ERROR, ANY REVIEW, USE, DISSEMINATION, DISTRIBUTION, OR COPYING OF THIS E-MAIL IS STRICTLY PROHIBITED. PLEASE NOTIFY US IMMEDIATELY OF THE ERROR BY RETURN E-MAIL AND PLEASE DELETE THIS MESSAGE FROM YOUR SYSTEM. THANK YOU IN ADVANCE FOR YOUR COOPERATION. C Legal Services Agreement-Tm... AGREEMENT FOR LEGAL SERVICES PROPOSED ASSESSMENT DISTRICT PROCEEDINGS WATER SYSTEM ACQUISITION AND REHABILITATION PROJECT TRUCKEE-DONNER PUBLIC UTILITY DISTRICT This agreement for legal services (this "Agreement"), dated as of August 28, 2000, is by and between the Truckee-Donner Public Utility District (the "District") and Orrick, Herrington & Sutcliffe LLP, Attorneys at Law, San Francisco, California ("Bond Counsel"). 1. The District retains Bond Counsel as special counsel to perform the following legal services relating to proposed special assessment proceedings and improvement bonds as follows: (a) preparation of all forms of resolutions, notices, affidavits, and other documents required by the Municipal Improvement Act of 1913 and Section 53753 of the California Government Code, including the legal format of the engineer's report required by Section 10204 of the California Streets and Highways Code; (b) preparation of written instructions to the District Secretary and other staff members concerning the performance of legally required duties; (c) review of documents prepared by the District's consulting engineers for the special assessment proceedings, including boundary map, assessment diagram, and assessment roll; (d) attendance at the public hearing on the engineer's report (including continuances of the hearing, if any); (e) attendance at all other public meetings of the District at which matters relating to the assessment district are considered, except routine matters; (f) attendance at staff meetings or meetings of property owners, upon the request of the District, after reasonable notice; (g) telephone consultation with staff members, the District's engineering consultants and, upon the request of the District staff, property owners to answer legal questions about the assessment proceedings; DOCSSF I.473529.1 1-411040 SS4 (h) arrangements for the preparation of improvement bonds to represent unpaid assessments; (i) in the event that the improvement bonds are to be sold through a public offering, whether by negotiated sale or competitive sale, coordination with the District staff and the District's financial advisor, disclosure counsel or bond underwriter, if any, on arrangements for the issuance, sale and delivery of the improvement bonds; (1) preparation of bond delivery documents; (m) rendition of a legal opinion on the validity of the improvement bonds and the proceedings leading to their issuance; and (n) preparation of a transcript of the legal proceedings in loose-leaf form for the use of the District. 2. The services of Bond Counsel under this Agreement shall not include the following: (a) legal services in connection with the acquisition of the existing water system, whether by negotiated purchase or by eminent domain, or the water system improvement project; (b) legal services in connection with the application for financing from the California State Department of Water Resources revolving loan program for water system programs; (c) legal services in connection with litigation; (d) legal services related to compliance with the California Environmental Quality Act regarding the improvement project or the assessment proceedings; or (e) legal services related to preparation of disclosure documents respecting the improvement bonds, related to arbitrage rebate tracking and reporting, or related to compliance with the District's obligations, if any, respecting continuing disclosure under SEC Rule 15c(2)-12. The performance by Bond Counsel of any service excluded by this paragraph, if required by the District, shall be under separate written agreement. DOCSSF 1:473�29.1 2 1-411040 SS4 3. To enable Bond Counsel to perform the services enumerated in paragraph 1, the District will be required to provide, either directly or through the District's consultants, the following: (a) mailing labels with the name and address of the owner of each parcel proposed to be assessed, cross-referenced to the assessment number assigned to such parcel on the assessment diagram; (b) labels to be affixed to the notice of hearing and the notice of assessment to be mailed to the property owners, setting forth the amount of the proposed assessment, cross-referenced by assessment number; (c) envelopes with a return address to the District or District Secretary for mailing notices to property owners, and first class postage on all such envelopes; (d) a verbal description of the improvement project (typically from consulting engineer or District staff); (e) the assessment roll (sometimes referred to as the assessment spread), setting forth the name of the parcel owner, as shown on the property owner records of the Nevada County Assessor, and the amount of the assessment, cross- referenced by assessment number; (f) the preparation and recording of the boundary map and the assessment diagram, conforming to the requirements of Sections 3110 and following, Streets and Highways Code, and in a form acceptable to the Nevada County Recorder for map recording purposes; (g) the engineer's report, with contents specified by Section 10204 of the Streets and Highways Code, prepared by the District's assessment engineer; and (h) the list of cash payments and unpaid assessments to be prepared (typically by the District's finance officer) following the 30-day property owner cash payment period. The District agrees to provide or cause to be provided each of the above in a timely manner to enable Bond Counsel to provide its services as prescribed in paragraph 1 of this Agreement. 4. In consideration of the services set forth in paragraph 1, the District shall pay to Bond Counsel the following fees and costs: DocssFI:473529.1 3 ;_411OaO SS4 (a) The legal fees shall two percent (2%) of the amount of assessments levied up to $1.0 million of assessments; one percent (1%) of the amount of assessments levied in excess of$1.0 million and up to $5.0 million; and one-half of one percent (0.5%) of the amount of assessments in excess of$5.0 million, with a minimum fee of$25,000 and a maximum fee of$75,000. (b) In addition to the fees provided in the foregoing paragraphs (a) and (b), Bond Counsel shall be reimbursed for its expenses, which include traveling expenses (charged at a cost of 30p per mile, plus parking, meals and lodging, if `I necessary), long distance telephone call charges, telecopying, postage and express delivery charges, reproduction of documents (charged at 20() per page), filing fees, printing charges, binding costs and like expenditures. Payment of the fees and reimbursement of the expenses shall be contingent upon receipt by the District of proceeds from the sale of the improvement bonds or proceeds of a California State revolving loan fund program loan, as the case may be, but payment of the fees and reimbursement of expenses known at the time of such receipt shall be payable forthwith upon presentation of an invoice, with the balance of expenses to be reimbursed by the District following presentation by Bond Counsel of a follow-up invoice for that purpose as soon as practicable following such receipt. (c) Additional expenses for services arranged by Bond Counsel, such as publications costs and necessary printing, at the request of the District, shall be incurred directly for the account of, and shall be paid directly by, the District. 5. Bond Counsel certifies that it has no interest, either direct or contingent, in any property or contract arising from or affected by the proposed water system acquisition and improvement project or the proposed assessment district, except as Bond Counsel under this Agreement; nor does Bond Counsel represent any owner of property within the proposed boundaries of this assessment district, and has not received a fee from any source for services connected with the proposed water system acquisition or improvement project. Further, Bond Counsel regularly performs legal services for many private and public entities in connection with a wide variety of matters. Some of these clients may have some direct or indirect relationship with the District, as, for example, bond insurers, suppliers, DOCSSF 473529.( G I-411040 SSd lenders, investment bankers, consultants, pension plan trustees, landlords, donors or bondholders. With varied client representation, there is always the possibility of other transactions between clients and of disputes among them. Bond Counsel has also served as bond counsel in financing by governmental entities that include states, counties, municipalities (including the City of Truckee and the Truckee Sanitary District), special districts and other political subdivisions, as well as departments and agencies of the foregoing. Bond Counsel is now providing services for these clients and expects to continue to do so in the future. The District is aware of Bond Counsel's ongoing relationships with such entities and the other public and private entities described above. No conflict is currently perceived to exist from such representations. To the extent any actual conflict is perceived to arise from such relationships, Bond Counsel will apprise the District of such conflict and, after reasonable review and consideration, the District will inform Bond Counsel whether it will waive such conflict. TRUCKEE-DONNER PUBLIC UTILITY DISTRICT By Authorized Representative ORRICK, HERRINGTON & SUTCLIFFE LLP By Samuel A. Sperry DOCSSH 473S29.1 5 1-411040 SSd STRADLING YOCCA CARLSON & RAUTH A PROFESSIONAL CORPORATION NEWPORT BEACH OFFICE ATTORNEYS AT LAW 9E0 NEWPORT CENTER DRIVE.SUITE 1800 NEWPORT BEACH.CALIFONIA 92680 44 MONTGOMERY STREET,SUITE 4200 TELEPHONE (949)725.4000 DAVID G.CASNOCHA FACSIMILE IWO)]45-11W DIRECT DIAL: (415) 283-2241 SAN FRANCISCO,CA 94104 DCASNOCHACSYCR.CQM TELEPHONE 1415)283-2240 SANT30 OLIVE OFFICE STREET FACSIMILE(415)283-2255 SANTA BARBARA,CALIFORNIA 93101 TELEPHONE (805)564.0085 FACSIMILE (805)544-1044 August 29, 2000 Peter Holzmeister General Manager Truckee Donner Public Utility District P.O. Box 309 11570 Donner Pass Road Truckee, CA 96161 Dear Peter: We thank you for the opportunity to continue representing Truckee Donner Public Utility District. Unless otherwise confirmed in writing,the terms of this letter and the enclosed Terms of Retention will govern our present representation of you in connection with the proposed establishment of an assessment district as well as any other representations as to which we are engaged by you. We will render to you periodic billings, typically monthly, for fees and costs which are due upon presentation at an hourly rate of$275 per hour. These rates may be modified from time to time upon notice to you. In accordance with our letter of this date,we have agreed to cap our fees for this work at not-to-exceed$15,000,unless otherwise expressly authorized by you to incur more time on behalf of the District. We are attaching our normal Terms of Retention,which is an integral part of our retention agreement. If this letter, including the attached Terms of Retention, accurately reflects your understanding of our relationship,please acknowledge your approval and acceptance of these terms by signing and returning this letter to me. Copies of each are enclosed for your files. I would be pleased to answer any questions you might have. By signing this agreement,and as further set forth in the attached terms of retention, we are agreeing to binding arbitration of disputes,whether as to fees, quality of services rendered, or otherwise, arising hereunder and are giving up the right to a jury or court trial, or to proceed under the arbitration provisions of the State Bar Act, California Business and Professions Code §§ 6200, et seq. If you so desire, we encourage you to have this agreement reviewed before execution by independent counsel acting on your behalf. Should you elect to have any fee dispute arbitrated pursuant to nonbinding arbitration under statutory or case law,then such nonbinding arbitration shall determine only the issue of the amount of fees properly chargeable to you. Any other claims or disputes between us, including claims for professional negligence, shall remain subject to binding arbitration pursuant to this agreement. DOCSSF\22914v l\22000.0029 Peter Holzmeister August 29, 2000 Page Two Very truly yours, STRADLING YOCCA CARLSON &RAUTH David G. Casnocha Enclosure The undersigned hereby agrees that the terms and conditions in this letter and the accompanying Terms of Retention shall apply to services rendered by Stradling Yocca Carlson& Rauth. TRUCKEE DONNER PUBLIC UTILITY DISTRICT By: General Manager DOCSSF\22914v I Q2000.0029 TERMS OF RETENTION OF STRADLING YOCCA CARLSON & RAUTH 1. Fees and Costs. Stradling Yocca Carlson&Rauth is compensated for its services based primarily on the value of the services and the time spent performing them. This includes the time spent on conferences, court appearances, depositions, travel, research, drafting documents, and other activities. The amount of fees charged on a statement is determined by the hours expended by the different attorneys and other professional personnel involved and the applicable rates. The firm also charges for various costs such as copying,telephone charges, computerized legal research, word processing and/or other computer time,overtime costs, messenger services, travel, filing fees and other costs. Bills for some costs are passed on directly, such as bills for certified shorthand reporters, technical consultants, and other professional fees. Payment is due within ten days of the date of each fee and costs statement. Overdue statements will be charged interest of 10%per annum,compounded annually. If you wish to question any charge,you have agreed to do so within ten days of the statement date. Please contact the partner in charge of your matters if you have any questions about any of your bills. 2. Estimates Not Binding. Although we may furnish estimates of fees or costs that we anticipate will be incurred,these estimates are not intended to be binding,are subject to unforeseen circumstances,and are by their nature inexact. 3. Termination by You. You have the right at any time,in your sole discretion, to terminate our services and representation. Upon our termination,you will remain obligated to pay for all services rendered and costs or expenses paid or incurred on your behalf prior to the date of such termination or which are reasonably necessary thereafter. 4. Termination by Us. We reserve the absolute right to withdraw from representing you if, among other things, you fail to honor the terms of our agreement, you fail to cooperate fully or follow our advice on a material matter,or any fact or circumstance occurs that would, in our view, render our continuing representation unlawful or unethical. If we elect to withdraw, you will take all steps necessary to free us of any obligation to perform further services, including the execution of any documents necessary to complete our withdrawal, and we will be entitled to be paid at the time of withdrawal for all services rendered and costs and expenses paid or incurred on your behalf. If necessary in connection with litigation,we would request leave of court to withdraw. 5. Date of Termination. Our representation of you will be considered terminated at the earlier of(i) your termination of our representation, (ii) our withdrawal from our representation of you, or(iii) the substantial completion of our substantive work for you. 6. Related Activities. If any claim or action is brought against us or any personnel or agents of the firm based on your negligence or misconduct, or if we are asked to testify as a result of our representation of you or must defend the confidentiality of your communications in any proceeding, you agree to pay us for any resulting fees, costs, or damages, including our time, even if our representation of you has ended. 7. No Guarantee of Outcome. We do not and cannot guarantee any outcome in a matter. DOC S S F1229 t 4v 1\22000.0029 8. Insurance. In accordance with the requirements of California Business and Professions Code § 6148,we advise you that this firm maintains professional errors and omissions insurance coverage applicable to the services to be rendered to you. 9. Client. This firm's client for the purpose of our representation is only the person or entity identified in the letter accompanying these Terms of Retention. Unless expressly agreed,we are not undertaking the representation of any related or affiliated person or entity, nor any parent, brother-sister, subsidiary,or affiliated corporation or entity, nor any of your or their officers, directors, agents, or employees. 10. Payment Notwithstanding Dispute. In the event of any dispute that relates to our entitlement to any payment from you, all undisputed amounts shall be paid by you. Any amounts in any client trust account held on your behalf, sufficient to pay the disputed amounts, shall continue to be held in such trust account until the final disposition of the dispute. 11. Arbitration. IN THE EVENT OF A DISPUTE REGARDING FEES,COSTS,OR ANY OTHER MATTER ARISING OUT OF OR RELATED IN ANY WAY WHATSOEVER TO OUR RELATIONSHIP WITH YOU, OR YOUR OR OUR PERFORMANCE OF THIS AGREEMENT, INCLUDING THE QUALITY OF THE SERVICES WHICH WE RENDER,THE DISPUTE SHALL BE DETERMINED, SETTLED AND RESOLVED BY CONFIDENTIAL ARBITRATION IN ORANGE COUNTY, CALIFORNIA. ANY AWARD SHALL BE FINAL, BINDING AND CONCLUSIVE UPON THE PARTIES, AND A JUDGMENT RENDERED THEREON MAY BE ENTERED IN ANY COURT HAVING JURISDICTION THEREOF. SHOULD YOU ELECT TO HAVE ANY FEE DISPUTE ARBITRATED PURSUANT TO NONBINDING ARBITRATION UNDER STATUTORY OR CASE LAW, THEN SUCH NONBINDING ARBITRATION SHALL DETERMINE ONLY THE ISSUE OF THE AMOUNT OF FEES PROPERLY CHARGEABLE TO YOU. ANY OTHER CLAIMS OR DISPUTES BETWEEN US, INCLUDING CLAIMS FOR PROFESSIONAL NEGLIGENCE, SHALL REMAIN SUBJECT TO BINDING ARBITRATION PURSUANT TO THIS AGREEMENT. Arbitration may be demanded by the sending of written notice to the other party. If arbitration is demanded,within 20 days of the demand you shall present a list of five qualified individuals who would be willing to serve that you would find acceptable to act as arbitrator. To serve as arbitrator, the individual must be a retired judge having served on any federal court or the California Superior Court or higher court in the State of California. Within 20 days of receiving your list, we may at our sole discretion(i) select any individual from that list and that individual shall serve as the arbitrator,or(ii)propose our own list of five individuals for arbitrator. If we choose to present a separate list, you may within 20 days select any individual from that list and that person shall serve as arbitrator. If no arbitrator can be agreed upon at the end of this process, each of us shall select one individual from our own respective list and those two persons shall jointly select the arbitrator. The arbitration shall be conducted pursuant to the procedures set forth in the California Code of Civil Procedure §§ 1280 et seq., and in that connection you and we agree that § 1283.05 thereof is applicable to any such arbitration. Nothing herein shall limit the right of the parties to stipulate and agree to conduct the arbitration pursuant to the then-current rules of the American Arbitration Association, the Judicial Arbitration & Mediation Services, or any other agreed-upon arbitration services provider. 12. Primary Attorney. The primary attorneys with responsibility for this representation will be David Casnocha, John Murphy and Doug Brown. 2 DOCSS F,22914v 1\22000.0029 STRADLING YOCCA CARLSON cot RAUTH A PROFESSIONAL CORPORATION NEWPORT BEACH OFFICE ATTORNEYS AT LAW 560 NEWPORT CENTER DRIVE,SUITE 1600 NEWPORT BEACH.CALIFONIA 92660 44 MONTGOMERY STREET,SUITE 4200 TELEPHONE (949)725-4000 Nvo G.CiASNOCHA FACSIMILE (949)72541W DIRECT DIAL: (415)283-2241 SAN FRANCISCO,CA 94104 DOASNOCHACSYCR.COM TELEPHONE(415)283-2240 SANTA62 OLIVE BARBASRAAEET OFFICE FACSIMILE 415)283-2255 SANTA BARBARA,CALIFORNIA 95101 ( TELEPHONE (805)564-0065 FACSIMILE (805)5841044 August 29, 2000 Peter Holzmeister General Manager Truckee Donner Public Utility District P.O. Box 309 11570 Donner Pass Road Truckee, CA 96161 Re: Lexal services relating to assessment district formation Dear Peter: Confirming our telephone conversation of yesterday, we would be very pleased to provide legal services to the District in connection with the formation of an assessment district to help provide financing in connection with the acquisition and improvement of the water system of the Donner Lake Water Company. While we are extremely proud of our overall record of success in providing legal services in connection with all types of municipal financings, assessment district and community facilities district proceedings are one of the specialties in which we are widely recognized as industry leaders. Thus, we would especially welcome the opportunity to represent the District as its finance counsel in connection with the proposed transaction. Stradling Yocca Carlson & Rauth, a Professional Corporation (the "Firm") was formed in 1975 and now includes approximately 110 attorneys. The Firm handles matters in substantially all aspects of the law except domestic relations, personal injury and criminal work. Our primary areas of specialization are public finance, public law, tax, general corporate law, corporate securities, real estate, litigation, labor and estate planning. The Firm has three offices in California, one in Newport Beach which includes all of the Firm's practice areas, an office in San Francisco which is devoted entirely to public finance work, and an office in Santa Barbara. We believe that the Firm's size offers an advantage to the clients that we represent for many reasons. First, the Firm has expertise in many areas, such as real estate, corporate securities and litigation, as well as public law, that can be useful in analyzing all relevant issues for a bond financing. Second, our size provides stability and assurance to the client that the Firm will be in practice to follow up on matters related to the services it renders. In our view, this aspect of stability and continuity should be of great importance to public agencies in an environment where, more than ever,bond issues require ongoing monitoring for federal securities and tax law compliance. DOCSSF22912v l�22000.0029 Peter Holzmeister August 29, 2000 Page Two We have one of the largest public law practices in the State, with over 20 members of the Firm practicing in the areas of general public law and public finance. Our public law attorneys devote substantially all of their time to the representation of the interests of public agencies, including counties, cities, redevelopment agencies, school districts, water districts, public utility districts and other special districts of various kinds, and to the supplying of legal services in connection with the financings of such agencies. Members of the public law department are recognized experts in their areas and are often called upon to speak at conferences and seminars for public agencies and other municipal finance specialists, including seminars held by the National Association of Bond Lawyers, the California Debt and Investment Advisory Commission, the California League of Cities, the California Redevelopment Association, the Association of California Water Agencies, the Coalition for Adequate School Housing, University of California Extension Programs and industry conferences held by The Bond Buyer and others. Since the late 1980s, the Firm has consistently ranked among the top four or five bond counsel firms in the State of California depending on whether the criterion used is the number of bond issues or their dollar volume. In each of these years, we have acted as bond counsel or underwriter's counsel on more than $1 billion in local financings. For calendar year 1999, the Firm ranked second in the State of California in terms of the principal amount of the financings completed as bond counsel, serving in that capacity on issues totaling over$3.4 billion. We have been involved in nearly every type of financing undertaken by public agencies and have helped to develop several of the structures which are widely used throughout the country. We have utilized fixed and various variable rate financing techniques to provide low interest rates on public projects. We believe that we have addressed unique financing problems by our solutions- oriented approach to working with issuers and other financing team members. The Firm has enjoyed long-term relationships with most of our clients. We believe that our longevity with these and many other clients underscores the high level of service that we provide on an ongoing basis. In particular, we have been complimented for providing excellent and responsive service to clients even when no immediate financing is on the horizon. We take a long-range view of a relationship with a client and know that eventually the financings will be completed, but that there is much important work to be done in between intensive financing periods. We believe that we are an undisputed leader in the State in providing legal services in connection with land-secured financings, such as assessment districts and community facilities districts. As such, we are frequently involved in the larger and more complicated such financings. For example, we served as underwriter's counsel in connection with the first variable rate community facilities district financing, as counsel to the property owners in connection with the first variable rate assessment district financings in both California and Nevada, and as bond counsel or underwriter's counsel in connection with financings that pioneered the use of the senior lien/junior lien structure to refund the bonds of multiple land secured districts. Our extensive experience in land-secured financings has allowed us to develop an expertise in analyzing the issues that are relevant for these types of financings, such as market absorption and property valuations concerns, developer D0CSSF22912v 1\22000.0029 Peter Holzmeister August 29, 2000 Page"Three disclosure and complex security structures. This experience serves our clients as well in connection with smaller financings. A list of the California land-secured transactions in which we have provide legal services during the current year and the three preceding years will be sent in hard copy as a follow-up to this letter. In addition, we have also provided legal services in connection with most of the larger land- secured financings undertaken in Nevada by Clark County, the City of Las Vegas and the City of Henderson. The attorneys in the Firm who would be primarily responsible for the legal work associated with the formation of proposed assessment district would be David G. Casnocha, who is located in our San Francisco office and can be reached at (415) 283-2241, and John J. Murphy, who is located in our Newport Beach office and can be reached at (949) 725-4160. On aspects of the engagement involving financing from the State's Revolving Fund they would be assisted by Douglas S. Brown of our Newport Beach office. I am a shareholder in the Firm and manager of the Firm's San Francisco Office. I received my B.A. in 1973 summa cum laude from Claremont Men's College, and my J.D. in 1976 from Cornell University Law School. I have practiced municipal bond law since 1977. My varied practice emphasizes governmental activity transactions for school districts, cities, counties, redevelopment agencies and other special districts. I have had the pleasure of acting as bond counsel on several matters for the Truckee Donner Public Utility District, the Tahoe Truckee Unified School District and other special districts in the area. John Murphy has been a shareholder of the Firm since 1978, practicing exclusively in the area of municipal finance. John received his I.D. in 1969 from the University of Virginia and is admitted to practice before the United States Supreme Court, the Ninth Circuit Court of Appeals and United States District Court as well as all California courts. He is a member of the California Debt and Investment Advisory Commission's Technical Advisory Committee and a frequent speaker at the Commission's seminars. He is also a frequent speaker at University of California Extension programs and at various municipal finance conferences and seminars. His practice has emphasized financings for traditional public infrastructure, with a particular emphasis on land-secured and revenue based financing. In the last three years he personally has served as bond counsel, underwriter's counsel, disclosure counsel or counsel to the property owner in connection with over $4 billion of bond financings. Our fee would be based on an hourly rate of$275,but we would not bill an aggregate amount in excess of$15,000 without your prior approval. If the District determined that it wished to issue bonds on behalf of the assessment district or certificates of participation on behalf of the District, we would submit a separate proposal for the additional work involved in connection therewith. In addition to the foregoing fees, we would expect to be reimbursed for out-of-pocket expenses incurred in connection with the engagement, including, without limitation, document reproduction,travel as approved by the District, and messenger services. DOCSSF122912v I\22000.0029 Peter Holzmeister August 29, 2000 Page Four A proposed Retention Letter is enclosed for your review as well as a separate letter explaining the content is also enclosed. Please feel free to call if you would like any additional information about the Firm or our approach to the proposed proceedings. Very truly yours, �a, David G. Casnocha DOCSSFl22912v 1\22000.0029 STRADLING YOCCA CARLSON & RAUTH A PROFESSIONAL CORPORATION NEWPORT BEACH OFFICE ATTORNEYS AT LAW 650 NEWPORT CENTER DRIVE,SUITE 1600 NEWPORT BEACH.CALIFONIA 92660 44 MONTGOMERY STREET,SUITE 4200 TELEPHONE (9a9)725.4000 DAVID G,CASNOCHA FACSIMILE CPS)7254100 DIRECT DIAL (415) 283-2241 SAN FRANCISCO,CA 94104 SANTA BARBARA OFFICE DCASNOCHA@SVCR.COM TELEPHONE(415)283-2240 302 OLIVE STREET SANTA BARBARA,CALIFORNIA 93101 FACSIMILE(415)283-2255 TELEPHONE (805)554-0085 FACSIMILE (805)564-1044 August 30, 2000 Peter Holzmeister General Manager Truckee Donner Public Utility District P.O. Box 309 11570 Donner Pass Road Truckee, CA 96161 Dear Peter: This letter augments our proposal dated August 29, 2000 relating to the District's acquisition of the assets of the Donner Lake Water Company. If the District elects to pursue the establishment of an assessment district to reach that objective, the following services are typically provided by special legal counsel: a. Consult with the District, its consulting engineers, financial advisers and investment bankers, in order to formulate a coordinated financial, engineering and legal program for the acquisition. b. Confer with the engineers with respect to the Engineer's Report to be prepared in the proceedings and review the Report for compliance with the applicable special assessment and assessment bond laws. C. Prepare the resolutions, notices, affidavits, certificates, petitions and other documents of a legal nature that are necessary for the conduct of the special assessment and assessment bond proceedings. d. Prepare the necessary legal documents for obtaining the consent of other public legislative bodies, if any, required for the conduct of the proceedings. e. Prepare the form of statutory notice of public meeting and public hearing and prepare instruction as to the mailing of such notice. f. Prepare instructions relating to the filing of the map showing the boundaries of the assessment district, the recordation of the notice of assessment and assessment diagram, and the publication and mailing of notice related thereto. DOCSSF\22936v 1\220W0029 Peter Holzmeister August 30, 2000 Page Two g. Prepare for and attend meetings of the Board, other public bodies, or meetings with property owners relating to the proceedings when deemed by the District to be necessary for the proper conduct of the proceedings, and provide advice in the presentation of substantial evidence to support the findings made by the District at the conclusion of the hearing on the Engineer's Report. h. Prepare the list of unpaid assessments upon expiration of the cash payment period and provide instructions as to the execution and filing thereof. i. Review the engineer's contract documents for compliance with the applicable assessment laws and prepare the resolution awarding the contract for the construction of the Project; in the alternative, prepare the acquisition agreement if improvements are to be acquired by the District. In addition, we are prepared and qualified to render advice on all issues which arise in the course of this process, including ones relating to the State Revolving Loan Program. If you have other questions please call me. Very truly yours, David G. Casnocha DGC:gr DOCSSF\22936v1\22000.0029