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HomeMy WebLinkAboutAGENDA REPORT 1996 1218 CC REG ITEM 10LCity of Moorpark Agenda Meeting TO: Steven Kueny, City Manager FROM: Richard Hare, Deputy City Man SUBJECT: Consider Professional Services for Community Facilities District to Include the Special Tax Consultant, Disclosure Counsel, Appraiser, Bond Counsel, and Underwriter DATE: December 11, 1996 Overview ! r ,.,... iTE /0• �► ,iii ,, • The City Council authorized the City Manager at the December 4, 1996 Council meeting to engage the services of Marshall Linn of Urban Futures as Financial Advisor for the formation of a Community Facilities District (CFD) related to the development of the Carlsberg site (Specific Plan 92 -1). Other professional services must also be secured in order to form a CFD and to sell bonds, if it is determined that a bond sale is feasible. Mr. Linn has reviewed proposals for the required professional services and made recommendations to the City Manager in the attached correspondence. Staff has reviewed the recommendations and concur with Mr. Linn's recommendations. Background The developers of the Carlsberg site, Specific Plan 92 -1, wish to form a Mello -Roos Community Facilities District (CFD) to fund basic infrastructure for the business park/sub- regional retail commercial portion of the site. It is estimated an eight to ten million dollar bond issue would be sold to finance the infrastructure for this portion of the development. The exact sizing of the bond issue would be determined after detailed review of the project, the bond market, the financial strength of the developer and an appraisal of the property. The developer would be required to deposit with the City sufficient funds to cover any anticipated costs. Upon receipt of the deposit, the City Manager would engage the professional services required. Underwriter Services The developer has been working with the firm of Seidler- Fitzgerald over the last several years in structuring the financing for this project. The City's Financial Advisor, however, is concerned about marketing the bonds to the largest group of investors possible and for that reason recommends a co- underwriter arrangement. The firm of Seidler - Fitzgerald would take the lead in the bond structuring and the firm of Miller & Schroeder which has a larger sales network would handle the sale of the bonds. The two firms would split the normal market rate for these services which typically do not exceed 2% of the bond issuance. Payment for these services would be contingent upon the sale of the bonds and paid out of bond proceeds. Recommendation Approve the recommendations of the Financial Advisor to engage the following firms: Special Tax Consultant: General Government Management Services ($17,500) Disclosure Counsel: Harper and Bums ($15,000) Appraiser: McNamara & Associates ($15,000) Bond Counsel: Jones, Hall, Hill and White ($40,000) Co- Underwriters Seidler- Fitzgerald (lead) Miller & Schroeder (sale) (2% or less combined) 2. Authorize the City Manager to sign all required agreements and contracts subject to the approval of final language by the City Attorney and City Manager. 961211.122 SENT BY :URBAN FUTURES ;12 -13 -96 ; 10:50 ; Urban Futures Inc.- 805 529 8270;# 2/ 5 URBAN FUTURES INCORPORATED To: Steven Kueny City Manager From: Marshall F. Linn Urban Futures Finenes - RedweloOment - 1nVb nerttn1ion • p*Mng MEMORANDUM Subject: Selection of Financing Team Members Relative to the Proposed 1996 Special Tax Revenue Bonds Community Facilities District (CFD) No. 1997 -1 (Carlsberg Business Park) Date: . December 12, 1996 (revised) As per your request, please find enclosed proposals for appraisal, disclosure counsel, special tax consultant and underwriter for the above referenced financing. I believe we have secured proposals from the best firms given certain constraints as outlined by the City. A. SPECIAL TAX CONSULTANTS General Government Management Services is a small firm owned and staffed by Mr. Alan C. Kapanicas. I, as well as Paul Thimmig of Jones, Hall, Hill and White, have worked with Mr. Kapanicas on various CFD assignments and have found his work product to be highly satisfactory. Even though his firm is small, he still has the ability to produce high quality maps and to assist this city during its filing periods. Fee $ 17,500 Taussig and Associates is one of the larger firms in the State dealing with Mello Roos issues. Since 1985 the firm has completed over 300 special tax formulas. I have worked with Mr. Taussig since 1987 and have found his work to be highly satisfactory. Taussig and Associates usually charges fees based on the size of the bond sale. In the case of Moorpark, said fee would be about $26,000 +. In addition, an additional fee of $4,500 would be charged for the maps. OEO.<w W.1214/98.BFCTA% Cre TAORICOMOfela Canter -9111 N. TU$Ilrt Awmun, Awle 2w, orange, CA 92865 -175,1 Tel; (714) 200.9334 Fax: (714) 283.9919 7%C ^ .- 1 -1 . - - SENT BY:URBAN FUTURES ;12 -13 -96 ; 10:50 ; Urban Futures Inc.- 805 529 8270;# 3/ 5 3. Prod No. 3 Charles Abbot Charles Abbott submitted a proposal some weeks ago offering a broad range of consulting service which are being handled by other professionals. I have reviewed the Abbott proposal and have extracted out those tasks expected of the special tax consultant. Abbotts' fee for the services we need is $50,000, or about twice the cost of the Taussig proposal, and over 2% times the costs of the General Government Management Services Proposal. While Mr. Abbotts' firm does serve In the role of City Engineer which would be most helpful, I do not feel that this experience warrants such a high fee. Recommendation All of the three candidates firms have the expertise to prepare the special tax formulas. Given the closeness of each firms ability the factor of price has turned out to be the key variable in my analysis. It is my recommendation that the City engage the firm of General Government Management Services. B. DISCLOSURE COUNSEL Harper and Burns is a small law firm located in Orange. John Harper, a principal in the firm, serves as the City Attorney for the cities of Murrieta, Norco and Lake Elsinore. Both Paul Thimmig and my self have worked with Mr. Harper on numerous transactions and have found his work to be highly satisfactory. I have worked with Mr. Harper for over 5 years and have found him to be timely, flexible and easy to reach. Estimated Fee $15.000. ••• 1• • n. TFIRIFT . Fulbright and Jaworiski is a large nationally known firm with offices throughout the United States. For the Moorpark engagement, the firm would assign Donald Hunt. I have worked with Mr. Hunt on various financing over the last 10 years and have found his work to be highly satisfactory. Paul Thimmig has also worked with Mr. Hunt over the last decade and reflects the same feelings I have. Fee $23,000. 3. Pr000sal NZ -3 Nossman G ►thner Knot and Elliott LLP Nossman, Guthner, Knot, and Elliott is also a large nationally known firm with offices throughout the United States. For the Moorpark engagement the firm would assign Stephen G. Melikian. I have only worked with Mr. Melikian at one other time in 1984, as such I cannot accurately comment on either he or the firm from a personal point of view. Fee $20,000 VD&PROP. t 2141MSFCTAX r%m 44 rGG .n.r. SENT BY :URBAN FUTURES ;12 -13 -96 ; 10 :51 ; Urban Futures Inc.— 805 529 8270,# 4/ 5 Recommendation Given the nature of the proposed financing, and the level of personal attention which will be needed related to disclosure issues, it is my recommendation that the firm of Harper and Burns offers a better value for the work that needs to be accomplished. C. APPRAISAL SERVICES 1. Proposal No. 1 David Kimura MAI David Kimura was recommended to our office by Steve Hayes. Neither I or Paul Thimmig have had any experience with him. I did interview him over the phone and have found him to be quite knowledgeable about the Moorpark area and the CFD approval process. He also seems to understand exactly what we need for a project of this type. While Mr. Kimura seems to be qualified his lack of experience does somewhat disturb me. Fee $9,000. McNamara and Associates is an Orange County based firm with varied experience throughout Southern California. John McNamara has years of experience appraising CFD's, assessment districts etc. His work is highly respected and would add to the saleability of the bonds as his appraisal report would be incorporated into the Official Statement. Fee $15,000. Recommendation Engage the firm of McNamara and Associates. Even though his fee is higher than David Kimura, his experience and "saleability" is well worth the extra cost. D. UNDERWRITER'S Miller and Schroeder is one of the strongest regional underwriters in the State with 15 bankers and a large retail sales operation. Miller and Schroeder were the underwriters for the Moorpark Redevelopment Agency tax allocation bonds issued a number of years ago. I have personally worked with the firm on over 50 transactions and have found them highly responsive to the needs of the client. In addition I have evaluated the pricing policy of the firm and have found them to be highly competitive with their fees and expenses. Given the nature of the proposed financing it is important that the City have an underwriter with a strong retail sales force. 05s.war.12/41W =AX DEr 1-4 1 C 1M: 90 SENT BY :URBAN FUTURES ;12 -13 -96 ; 10:51 ; Urban Futures Inc.- 805 529 8270.# 5/ 5 2. Proposal No. 2 Seidler- Fi zggrlad Public Finange Seidler is a full service regional underwriter with a vast amount of experience in the structuring of Mello Roos Financing. it is my understanding that Seidler has been working with the Carlaberg people over the last few years, as such they are very familiar with the project itself which I feel will add value to the financing team. The weakness I see with Seidler is their lack of a retail selling capacity which will be needed to sell our bonds. Recommendation Given the nature of the two underwriters and the demands of the Moorpark transaction it would be my recommendation that the City engage both Miller and Schroeder and Seidler - Fitzgerlad as co- underwriters. E. BOND COUNSEL Jones, Hall, Hill & White is a nationally recognized firm with its' main office in San Francisco. We have met with Paul Thimmig of Jones, Hall, Hill & White relative to their engagement as Bond Counsel on the above referenced financing. Mr. Thimmig is a recognized expert on the formation of community facilities districts in the State of California. Fee 635,000 (additional reimbursable expenses not to exceed 05,000) Recommendation It would be my strongest recommendation that the City engage Jones, Hall, Hill & White as Bond Counsel for the above referenced financing. 05L PROP. 12woo- 6PCTAX DEC 13 '96 10:52 714 283 9318 PAGE.05