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HomeMy WebLinkAbout0210.094·' ~staff 12 ~ . :te1)CNt------- Karch ll, 199-4 'I'IlII HONORABLE CITY COUNCIL ~.lo Alto, Ca~ifQrni. Nem~rs of the Council: This report requests that Council award a contract in the amount of $58,000 to Dsloitte .& Touche of Oakland, California for the gene:r'al fixed assets inventory. The consultant wOlk will include deteraining values and service lives of those assets, and providing other informatiQn necessary for irnplementat~on of the City's fixed assets data base. In addition, staff recommends that Council authorizQ th~ city Manager or her desi9n~e to e~ecute one or more chanqe ()t'ders to the contrac.t with beloitte & Touche for additional related but unfol:eSf);sa;ble work. The value of those change orders shall not "o)(ceed $5 1 800. Funds for this project are budgeted in the Financ& Dopartmont's 1993-1994 budget. The Finance committee, Which" had indicated a desire to participate in the consultant salection for this contract, agreod to allow the contract to go directly to counoil because of the short timeline for t.he consultant's 'Work -in order to have the results incorporated into the 1993-94 audit . .b.21sgr9\ln" Th" city established capi,tal assets"records for its utilities funds in 1986. Accurate fixed assets list.ings are also maintained for the City's internal service funds, and t.he City has an inventory of :t·eal proporty for insurance purposes. However, no comprehensive ~nven~ory of the Cityls general fixed assets has been performed. Since the end of fiscal year 1985-86, the Cit y's, external auditors have qualified their opinion on the City's financial statements. This :me-ana that the a'lditors are unable to issue a Ilclean" opinion ~ecauso they cannot verify that the finan,~ial statements fairly presont tho financial condition of the City in all material aspects CMR:210:94 (·.··L····: '., ,-"" , . . . ·.L I I ', .. ;: I I I I • ~nleBs they are able to audit the general fixed assets. They have also given a management letter co~ent 1n each year since 1985-86 f citing' the ir.t{)ortance of fixCQ assots records in J\;aintaining accountabilly for the city's property. Although Council initially approved funding tor the establishment of ~ Fixed Aosets Inventory and Accounting System in 1991-92, the additional accounting position needed to direct the inventory and fixed assets system, ll!1pl()r..entation was r()rlloved· from tho budqot due . to budget li~ltations. The project Was poatponed to tha curront tiscal year. WorK on th" project" "as scheduled to begin in sept.al:lber 1993, but wau .again postponed due to the cOJMl;itment ,of Pinance Oepart~ent resources to assist Palo ~lto co~unity Chlldcare in restructuring their financial operattons. Fin:llnce staff havQ reprioritized othor \lork in ordor to complete the valuation priOr. to the end of tho fiscal year, which concludes on June 30, 1994. In o~dor to substantiate and nonitor its largo investment in general fixed assets, th~ City seeks a cOr;Jprehensive review, inventory, and w'Iluation with which to establish accur8lte accounting records. Daloitto'& 1'ouche will take advantage of the cityfs QXisting n~cord5 to minit!)ize the cost of inventorying and valuing the Gonoral "'Und. The scopo of work of the project involves the following co~ponent9: o In cooperation with City Rt6ff , davolop d work plan for the reView, inventory and -ialuation of the cityrs genet"al fixed assets. o [)otenine Which fixed assets require physical inventories based on a review of all I&xis.tinq fixed assets information. (The City intonds to naintain a record ot all assets with a value of at least $1,000 and a usetUl service lifa of greater than three y('·ars). Conduct rlecessary physical inventories and assign identifying code numbars to assets. o Develop estimated date$: of acquisition and estimated or"iginal costs for the assot,s invontQried, as well as estimated replacement valuos for the City's buildings and fixtures. o Provide, upon completion of the project, specific data base reports to the City and ensure final acceptance by external auditors of the worK product. o Develop and assemble a property ~anual describing policies, procedurot;s, and controls tor maintailling the inventory. Advise city staff of l'ccol'rlmonded policies and procedures which C/ffi:210'94 2 "., -:.~" .'.' , ", . " " _.' .:"'._,_ .. -,-,-,"---,,," .. will aid the city in the successful development and maintenance of fixed assets information. o Prepare a report for presentation to City staff and the Finance Committee describinq nethodology employed and projoct results. 8i4 IValuations The project was sent Qut to ten qualified potential cOl1t,ractorE:-for competitive proposals, includin9 both accountancy firRB and professional appraisers. The firms invited to subnit " proposal tor the project woro selected in an effort to award the contract to a firm vhlch would meat tho City's primary goals: to obtain al.lditable information on the City's fixed assets in accordance with GoneX'.ollly AGceptoc1 ~ccountll'lg PrinciplQs (GMP), to receive and retain lm unqualifiE:d audit opinion for tho city's Comprehensive AnnuOll rir:Hlllci~l Report and to aid in the development of procedures which will ensut:e proper maintenance of the new property accounting system. Proposals were received from four qualiCiea bidders on March IS, 1994. In addition to tho proposal fr'om Oololtto & 'l'()ucha, three bids were received from professional appraisal tirrllB with experience in professional valuation consulting services to municipalities. The bids ranged from $25,800 to,$107,OOO. Staff assessed the hids on the following criteria: I\pproach, cost, industry experience, accounting experience, and project t_irnellne. Ths greatest consideration was placed on the consultant's proposed approach to the project and Oll it. ability to .aUsty aU the requirements set forth by tho City. After careful oVAluation, staff determined that the proposal 'Which meets or eX¢f:'lods all of the Cityls requirements is Deloitte & Touche. Tne proposal submitted by Deloitte & Touche olearly demonstrates th&ir understanding of the city's needs. Beyond merely establishing the fixed ~ssets accounting record, th~ consultant is needed to aid th3 city in establishing proper controls, assuring the Ability to adequately maintain the fixed assets data base, and providing tor prop~r finanoial reporting of the city/s assatsc staff believes Delo!tte & Touche is best qualified to perform the work with this emphasis .. ~U8Se!lSment This project has no'environmental impact. No environmental review is necessary. CMR:210:94 3 "' staff recommends that Council: l. Authorize the Mayo .... to execute a contract liith Deloitt. & Touche of Oakland, California in the amount of $58,000.00 for General Fixed Assets Inventory; and 2. AuthorizB th~ city Manager or her deaignate to negotiate and execute one or more change orders to tho General Fixed Assets Inventory with Daloitte " Touche, the value of 'Which change orders shall not exceed $et~oo.OO. Respectfully submitted, ~t!~~ ~~/f:Zj Y HARRISON n nee Dire.c CHR:210:94 4 ,;. .. \ t r· I"~ , ,-,' • AGREEMENT BETWEEN THE CITY OF PALO ALTO AND DEWITTE &. TOUCHE FOR GENERAL FIXED ASSET INVENTORY VALUATION AND CONSULTING SERVICES This AGREEMENT.is mada and antered Into this __ day of • bv end belwAen the CITY OF PALO ALTO. a municipal corporation of California. hereinafter referred to as the ·City·. and DF,lOITIE & TDUCHE. a partnership. whose address Is 2101 Webster Streat. Oakland. California 94612, hereinafter feferred to 8S tIIConsultant lO • WHEREAS. jt Is the Intenllon of the City to provide for the implementation of a Genoral Fixed Asset system, which entails the initial inventory and valuation of specific assets 01 the City~ and establishment of policies and procedures adequate to Insure the proper maintenance of the Fixed Asset data base; WHEREAS, Consultant is a partnership of cenHied public accountants, duly .outhorized to practice and licenstld a,o; such by the California Board of Accountancy; WHEREAS. Consultant rapresents that it has the professional qualifications and sklils to provrde the inventory, valuation and consultant services required, and th8 City wishes to retaln the Consultant'S services in relIance thmeon; NOW~ THEREFORE, in consideration of their mutual covenants, the parties hereto agros as follows: 1. SCOPE OF SERVICES A, The Consultant will develop, in joint cooperation with personnel of the City: a comprehensive approach and work plan for th8 review, inventory and valuation of the City's general fixed aSi:iets. B. The Consultant will compile and review all existing fixed asset information lncluding Inventories of land and improvements, buildings and structures, and equipment, regardless of the funding source. Based on this review, a determination will be made of which fixed assets will r,-quire phvsical inventories, " It is propo.,ed that all assets with. value of $1000 and a useful life of greater than three years will be maintained wilhin the fixed asset "91"-"1'14111 ~tW'M 1M City of Po$ICI Alto 111M Defoatt. &. Tooche lor Vet--~,tiO" 0& Con~Llltlll11 S er,·;ce. P69' I ,; I. i I I .. I , i·' i I I I I : .. 1\ subsidiary ledger. Supply Inventories and s~ar. parts will not be Included. InfraSiruclUre fiKed assets (roads, bridges, curbs and guners., streets and sidowalkt not 8ssocisled with City structures or pa{l<s, str8(tt signs and street lighting systoms/ parking moters, traffic signal svstemsl, will not b. recorded. C. Upon reviow 01 lixlstlng fixed asset information, proposed coding and Inlormalicn roqu){emOnls, and Ihroughout the remaining work plan, Consultant will a\lvis.City projoct porsonnel as to recommanded policies, procedures and prac"esses which will aid the City in successful development and malntenarice of fixed assets Information. D." The Consultant will conduct the Inventories as identified in the preliminary review. Tho Cons'JHant will fntOJ(8ce as needed willl the project manager 10 ensure that advanco nOlic'O is provided to all locations, necessary access is obtafnsd. and dlsrupt<on of the regular wo,k day is Il'linimized. E. Tho Consullant will obtaIn the following data (or each asset 8S applicable: A~sot description Vendor Manufacturer Ma~o Model Sorial Number Location Department Account Project numoer Classification Prlmary Secondory Normallifa, by class Condition 01 Assel Speclfio codes have been developed lor all of the above data items. wilh the axceptlon of the assel (lescriptlon. TIl. assat dasc{iplion will follow 8 proscribed format in order to provide consistency to the fixed asset listing and "noble Iho data baso to be purposefully Salted by Ihis data field. Asset ktentiflcatlon numbors will be assigned separately; the system of assigning unique 8sset idel1tifjcation numbers has not yet been established. Identification tags wiH not be utiffzed. F. In addition 10 tho above data, the Consultant will dovelop and assign AIl'otOW11 btl ",un tll.e City..:ll p~o AI!.o aM o.1<><lt" &. T~ hr \l1IIi.i .t~ &. ConwlUn! S .Nic~ I Pllgt 1 :'.; ';" .' f , ' ( -:0:-1 , l r ~ f • " i' ~ ~~ ~ ? ;:: estimates of dates 01 acquisition and estimated original costs to the assets Inventoried; Estimates of teplacement valuo lot tho CiW's buildings and fixture. will also be ptovided by Itlll Consulta"!. G, The City will provide the consultant with a file layout of the required fields with field format. The Consultant will then provide tha CHy with tila Inventory data In an ASCII fila on a m<ldia to ba dotormlned. H. Tho Consultant will provide specific reporls to tho City of tho data .base as it aKists at the completion of the project, Including bul not nocossarily limit.d to: Fixed assot. by depBltmont, site and class FIxed assets by sito. dass. and departfll(Jf1t Fixed assets by class, departmont and SilO Fixod assets bV exp1!cted retirement dales, by department Classification summary and detail Departmontal summary and datail Fixed 8SS0ts by fund l. Because an important reason for developing tho fixed 8sset management system is to ensure an unquatified audilor's roport with rtJspcct to the City's goneral fix.ed assot information, the tinsf work product must be acceptable for these purposes by tho City'S auditolS. J. The Consultant will be resPQnsiblo for tho development of a property manual descfiblng poticies end procodures for maintaining the Inventory. K. The Consultant will propere and ptesent to City staff a dreft repon descrilling the Consultant's methods and the prolect's.results, Aller ravi6w by tho staff, tho Consultant will present a final repotl to tho City Manager, and will be available to present tha raport and answer questions at a City Council meeting. 2. INVOICES, COSTS, AND SCHEDULES A. Consultant shall submit billings 8S tho work progresses. A final ten parcont (10%1 of tho reos stipulated in Section 2.0. of this Agreemont will be held as a retainer contingent upon the CilY'S deto(mrnation that tho Consultant has satisfactorily perlotmod tho servic"s described In Section 1 of this Agreement. B. Consultant shall submit invoices 8S the work progrosses. Costs shall be A~"M'101'11 ~twun 1M City of Pao ,0\1(0 and O&lo;tl6 .. T(;Uf;M for V6/veti?n" ~n"'."l'''l Suvleu '. " " . ·,\ . .:"S~ .. '.:.'> '.".;'~'_>-'-'-___ "'=*7-.~{!~~~~[~~_! Identified 8S defined In section 1 of this agreement with sufficient detail to provide verification of the Invoiced amount. Invoices shall be submitted to the, City of Palo Alto P.O. Box 10250 Palo Alto, CA 94303 Attention: Carer ferrell, Accounting M.anagar C. Consultant shall maintain bOOKS and records supporting all reimbursable costs for services herein. The City shall have aC(;oss during Consultant's regular business hours to such books and fecords of Consultant 8S requirod to verify any and all roimbursable costs invoiced. D. rn consideration of the services to be performed, as liescribed 1n Section 1 of this Agreement, the total payment to Consu!!ant .hall not exceed ~58,OOO. plus $5,800 for any additional consultant work required and authorized in writing by the City. E. Services to be performed under this Agreement by the Consultant shali include the delivery of the roports and documents described in Sections 1,G., 1.H., I.J., and 1.K. of this Agreement. The General Fixect Asset Policy and Procedures Menuat described in Section 1.J. shall be dOlivered on electronic media as prescribed by the City, as well as in hard copy .. 3. SPECIAL CONDITIONS A. B. Entir.§ .. ilru§,Il!I!.ru!l; The Agreement between the City and Consultant will constitute the entire agreement of the parties hereto, and will sllperseda any previous agreement or understandings with respeci to lis subject matter. The Agreement may not be modified except in writing and executed by both parties. The Cit~1 Manager is authorized by the City Council to execute any ammendments to this agreement. Force Majeure, Perlormance of the Agreement by each party shall be pursued with due diligence in all requirements hereof; howover. neither party shalJ be tiable for any loss or damage for delay or nonpiHformance due 10 causes not reasonably within its control. In the event of any delay resulting ,from such causes~ the time for performance and payment hereunder shaH be e.'<tended for a period of time reasonably necessary to overcomo the effect of slich delays. In the event of any delay or nonperformance causod by such uncontrollable forces, the party affected shall promptly notify tile other in writing of the nalUre, cause, date of commoncement thereof and tllO AQrtO!'M M bth¥tHllhe City of Plilo Aflo ..... ond O~loine a.. TOUCM f~ Va/u8Iior'l &. ConS\Alent Sern(~, : ... " t ,.'. . I;·· anticipated extent of such delay, and shall Indicate whether It Is anticipated that the completion dates would be affected thereby. c. Wyta= Consultent must provide a cenificale of insurance in a form acceptable to City'. Risk Manager prior to entering into the Agreement evidencing the Consultant's insurance cOl/fJrage in the forms and amounts set forth In Exhibit A to this Agreement. Consultant shall maintain such Insurance as will cover and include 1he entire obligation assumed in the Agreement as well as such Insurance as will protect the Consullant from claims and liability under Worker's Compensation Acts, personslliability, property damage, and .11 other claims for damages, Including personal Injury, and death, which may .rlse from operations under the Agreement. D. Scheduling; Consultent shall develop and maintain a detailed schedule for the work requirod under the Agreement. Consultant shalf subrnit progress data as required by the City Consultant. E. S.l!mHil¥Jltl>J!le~ All data provided by or for the City shall: 111 be kept in confidence and nOI disclosed to third parties without the prior written approval of City; and (21 not be used in the production, or design of any atticle or material, report or press release, without City'S prior written conS{lnt. These obligations $hall survive the termination of the Agreemen~. The ConslJltant shall be fully responsible for the care and protection of workpapers. F. SlJbcontrw~ Consurtant is encouraged to consider subcon1facting portions of the wOlk or services under the Section 1 to small firms or firms owned and controlled by socially and economically disadvant~ged Individuals. If this is to be done, Consultant shall submit a description of the work or selvices to be done under such subcontractlsl together wilh the name of the proposed subcontractor's) who shall perform any pari of the services. G. ~ Except where specificallv provided, the feos stipulated in Section 2.F. of this Agreement shall include all federal, stale, and local salos, use, excise, Iransponatian, privilege, occupational, and other taxes applicabla to servlc8 1 materIals or equipment furnished under the Agreement or by the Consultant's payroll. The Consultant agrees to indemnify and keep City harmless from and against any liability for any slich taxes, or payroll premiums and contributions payable by the Consultant. Agrtementblllw .. on 1M Cily of Pa1'o Alto 6nd De!GlIIIII It TOOCM 10' I/alualion" Con..-Jltenl S'MCOS 'ag" 5 ,.,., \, " ~ '.- I i' I i I I .. · . i i·· , H. \: C!,aoge~ The Agreemeot shell oot be assigoed or traosl.rred without the writton ~onsent of City. No changes or variations of any kind are authorized without a slgoed amendment to the Agreement. Anv additional work or changes to the scope Of tho Agreement cannot be authorized bV anvane excopt the City'S Accounting Manager.or Finance Director. Such authorization must be obtained in writing in advance. III Consultant shall unconditionallv warrant that it shall use sound and professional principles and practices in the performance of the services req'uired herein. Con:;:ultant sl~all utilizo the princrpars as set forth In Generallv Accepted Accounting Principles IGAAP) and ~rilBntaI Accounting. Auditing and Financial Reporting (GAAFRI in establishing the fixed asset records required. (2) If Consultant fails to fulfill the foregoing warralltf witl,in the term of tho Agreement, and fails 10 cure such failure within 30 days after writton notice thereof by the City to the Consultant, then the City may trrminate tho Agreement and requ!m reimbursement of all expenses necessary to roplace or restore, such services. J. I..ill1!Hnn.i1Y~ Consul[anl hereby agrees to protect. indemnify, defend and hold hrumless 'City. its officers, agents, and employees from cmy and all demands, claims or liability of any nature, in each case solely tor bodiiy Injurv to indi,iduals, including wrongful death, and physical damage to real or tangiblo personal properly. to the extent directtv and proximately caused by the Consultant's, its officers~. agents~ or emplovees' negligent acts, Or(or5, or omission, or willful misconduct. or conduct for which the law imposos strict liability on the Consullant in the performance or non· performanco of the Agreement; providod, howover. that if thete is also fault on the pelt of an-; indemnified party or any lhird party, the foregoing indomnlty shaH be on a comparative faull basis. As a condition to the foregoing indemnification Obligation, the City shall provide the Consultant with prompt notice of any claim tor which indemnification may bo sought hereunder and shall cooperate in all reasonable respects with the Consultant In connection with any such claim. The Consultant shall be entitled to control tho handling of any such claim and the defonse or settlement thereo( in tts sole discretion, with counsel of its own chOOSing. K. .8f(irmative Action Requiremen..t In performing services under this Agreement, the Consultant shall be required to complv with all laws concerning non-discrimination and affirma1ive action in employment. and shall be subject to all penaltios, including penalties set fonh in tho Palo Alto Municipal Code. in the event of a violation of this provision. "OJu.",..,.1'\t ~1 woeo ... 1M Citv 01 f'&!() Alto .. nd bol~lt6 & Tou<:ho lor V&lUII>or, &. Con$\.lllal'll SeMen '." '" r. , ."' . l, l0terest of CowactoG At ell tlrno$ the Consultant shall be deamed to be an ind.pendant contractor end the ConsuHant shail not be authorized to bind City 10 aoy conll.e! or other obl'getlon. Under to" Agreement, the Consultant will cenlfy th.t no ona who has or will have any financial intorost under the Contract Is en oUieer or employee of City. (Remainder 01 p.oe Intentlon.lly loft bJ"nk) AIt"tmont btl ""ttl'! 1M City 01 P .. .,. All>:! .rod Pol«rt~ &. twch-t 10( \I_\,I~tiM & eor,$vlllI~ SeMc-il1 IN WITNES~. WHEREOf, City end ConsuM~t have eXfcut,d t~s AG",e~nt the day and ve41 first ebove w~1ton. . ATTEST: CITY OF PALO ALTO C;ty Clerk Mayor APPIlOVEO AS TO FORM: DElOlne & TOUOH~ By: _t'~_~~"L"~ __ Ito: ~~d.:2 r:_"" ___ _ APPRoveo: FiOBnc& Director. AocounUng Manege' Risk Mooegtr AglUlTIIrnl teu", In h C(ty.oP PO!o A!w .aM Otl"rt. & T9VWI' '«t v .. 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