HomeMy WebLinkAboutEmpire Economics Inc; 2007-06-29;AMENDMENT NO.2 TO EXTEND AND AMEND AGREEMENT FOR MARKET ABSORPTION
STUDY SERVICES
EMPIRE ECONOMICS, INC
, This Amendment No. 2 is entered into and effective as of the <^o day Of
y'T''?***^-^-- 2008, extending and amending the agreement dated June 29, 2007 (the
"Agreement") By and between the City of Carlsbad, a municipal corporation, ("City"), and Empire
Economics, Inc., a corporation, ("Contractor") (collectively, the "Parties") for a market absorption
study and price point study.
RECITALS
A. On October 26, 2007, the Parties executed Amendment No.1 to the Agreement
to include a market absorption study supplement; and
B. The Parties desire to alter the Agreement's scope of work to include a market
absorption study and a price point study for the City of Carlsbad's Assessment District No.
2003-1 College Boulevard and Cannon Road East Benefit Area No. 2 - Robertson Ranch (AD
No. 2003-01 BA-2); and
C. The Parties desire to extend the Agreement for a period of one year.
D. The Parties have negotiated and agreed to a supplemental scope of work and
fee schedule, which is attached to and incorporated in by this reference as Exhibit "A", Scope of
Services and Fee.
NOW, THEREFORE, in consideration of these recitals and the mutual covenants
contained herein, City and Contractor agree as follows:
1. In addition to those services contained in the Agreement, as may have been
amended from time to time, Contractor will provide those services described in Exhibit "A". With
this Amendment, the total annual Agreement amount shall not exceed forty three thousand
seventy five dollars ($43,075).
2. City will pay Contractor for all work associated with those services described in
Exhibit "A" on a time and materials basis not-to-exceed twenty two thousand seven hundred fifty
dollars ($22,750). Contractor will provide City, on a monthly basis, copies of invoices sufficiently
detailed to include hours performed, hourly rates, and related activities and costs for approval
by City.
4. Contractor will complete all work described in Exhibit "A" by June 28, 2009.
5. All other provisions of the Agreement, as may have been amended from time to
time, will remain in full force and effect.
6. All requisite insurance policies to be maintained by the Contractor pursuant to the
Agreement, as may have been amended from time to time, will include coverage for this
Amendment.
City Attorney Approved Version #05.22.01
7. The individuals executing this Amendment and the instruments referenced in it
on behalf of Contractor each represent and warrant that they have the legal power, right
and actual authority to bind Contractor to the terms and conditions of this Amendment.
CONTRACTOR
(print name/title)
(e-mail address)
(print name/title)
DARLSBAD, a /municipal
the>State of-CaJffo/nia
CITY OF
corporation
By:
u \
ATTEST:
)RHAINE
City Clerk
(e-mail address)
If required by City, proper notarial acknowledgment of execution by contractor must be
attached. If a Corporation, Agreement must be signed by one corporate officer from each of the
following two groups.
*Group A.
Chairman,
President, or
Vice-President
**Group B.
Secretary,
Assistant Secretary,
CFO or Assistant Treasurer
Otherwise, the corporation must attach a resolution certified by the secretary or assistant
secretary under corporate seal empowering the officer(s) signing to bind the corporation.
APPROVED AS TO FORM:
RONALD.
Jeputy City Attorney
City Attorney Approved Version #05.22.01
EXHIBIT "A"
SCOPE OF SERVICES AND FEE
Provide a price point study for City of Carlsbad's Assessment District No. 2003-1 Benefit
Area No.2 - Robertson Ranch (AD No. 2003-01 BA-2) which will include the following:
o estimated current base prices for each residential project;
o review of special assessments to conform to the maximum tax burden of the
City of Carlsbad;
o consideration of product prices for estimating land values;
o discussion of financial factors underlying housing price appreciation, declining
fixed rates, adjustable rates and creative financing structures, and the
movement towards more traditional mortgage structures.
The price point study will be based on a systematic analysis of the following factors:
o proposed prices for the forthcoming residential products in AD No. 2003-01
BA-2;
o description of the methodology underlying the analysis of housing prices;
o identification of comparable projects in the City of Carlsbad and its vicinity;
o market surveys of comparable projects;
o statistical analysis of housing prices and value ratios;
o potential adjustments for special/creative mortgage loans;
o Empire Economies' price recommendation.
Provide a market absorption study for AD No. 2003-01 BA-2 which will include the
following:
o estimated absorption/escrow closings for each residential project;
o amount of special assessments paid by developers/builders vs. homeowners;
o absorption-discounted cash flow.
The market absorption study will be based of systematic analysis of the following factors:
o macroeconomics components used to arrive at long-term employment
forecasts to derive future demand for housing within the market area;
o identification of the proposed product mix based on the planning approvals
for the properties as well as the development/marketing strategies of the
developers/builders;
o microeconomics components to determine the competitiveness of AD No.
2003-01 BA-2 to the competing planned communities in the market area and
take into consideration location, prices, lot sizes, living areas, special
taxes/assessments, amenities, and other factors;
o market price gap and adjustment to equilibrium to take into consideration the
"gap" between market prices and income-based prices
City Attorney Approved Version #05.22.01
o absorption schedules to include an aggregate absorption schedule to analyze
the market demand and supply condition for all residential products within AD
No. 2003-01 BA-2, and an absorption schedule by project to analyze the
demand and supply conditions for each residential product types, and for
each of their respective projects
Provide the Price Point Study and Market Absorption Study in PDF format
Provide the Comprehensive Market Study in PDF format for the Official Statement
Provide the Certification to Use Market Study for the Bond Offering
Provide a discussion/presentation of the Market Study to the City of Carlsbad
Respond promptly to queries from prospective bond purchasers
Consulting Fees:
Consulting fees for both studies - performed separately
Price Point Study: $ 6,250
Market Absorption Study: 16.500
Total: $22,750
Consulting fees for both studies - performed simultaneously
Price Point Study and Market Absorption Study: $19,500
City Attorney Approved Version #05.22.01
AMENDMENT NO.1 TO AGREEMENT FOR MARKET ABSORPTION STUDY SERVICES
EMPIRE ECONOMICS, INC.
"Op Amendment No.1 is entered into and effective as of the <g><^^ day of
^<L^A—^ 2007, amending the agreement dated June 29, 2007 (the
"Agreement") by and between the City of Carlsbad, a municipal corporation, ("City"), and Empire
Economics, Inc, a corporation, ("Contractor") (collectively, the "Parties") for a market absorption
study supplement.
RECITALS
A. The Parties desire to alter the Agreement's scope of work to include the partitioning of
the aggregate absorption schedules by ownerships and phases for Community Facilities District
No. 3 Improvement Area No. 2; and
B. The Parties have negotiated and agreed to a supplemental scope of work and fee
schedule, which is attached to and incorporated by this reference as Exhibit "A", Scope of
Services and Fee.
NOW, THEREFORE, in consideration of these recitals and the mutual covenants contained
herein, City and Contractor agree as follows:
1. In addition to those services contained in the Agreement, as may have
been amended from time to time, Contractor will provide those services described in Exhibit "A".
2. City will pay Contractor for all work associated with those services
described in Exhibit "A" on a time and materials basis not-to-exceed Three Thousand Eight
Hundred and Twenty Five dollars ($3,825.00). Contractor will provide City, on a monthly basis,
copies of invoices sufficiently detailed to include hours performed, hourly rates, and related
activities and costs for approval by City.
3. Contractor will complete all work described in Exhibit "A" by June 29,
2008.
4. All other provisions of the Agreement, as may have been amended from
time to time, will remain in full force and effect.
5. All requisite insurance policies to be maintained by Contractor pursuant to
the Agreement, as may have been amended from time to time, will include coverage for this
Amendment.
6. The individuals executing this Amendment and the instruments referenced
in it on behalf of Contractor each represent and warrant that they have the legal power, right and
actual authority to bind Contractor to the terms and conditions of this Amendment.
City Attorney Approved Version #05.22.01
CONTRACTOR
(print name/title)
address)
(print name/title)
^ oc
CITY OF
corporation
By:
L'
City Clerk
A*1*""//!o<V.SBAo£/,x
-,< V> • '•. Qt '
; OV ^'V^f,'',
^>--&'±:1S3&?~''<:F =gz
(e-mail address)
If required by City, proper notarial acknowledgment of execution by contractor must be attached.
If a Corporation. Agreement must be signed by one corporate officer from each of the following
two groups.
"Group A.
Chairman,
President, or
Vice-President
**Group B.
Secretary,
Assistant Secretary,
CFO or Assistant Treasurer
Otherwise, the corporation must attach a resolution certified by the secretary or assistant
secretary under corporate seal empowering the officer(s) signing to bind the corporation.
APPROVED AS TO FORM:
RONALD R. BM.L City Attorney
jeputy City Attorney
REV. 10/01/2007
EXHIBIT "A"
SCOPE OF SERVICES AND FEE
Partition the aggregate absorption schedules by ownerships and phases for Community
Facilities District No. 3 Improvement Area No. 2 (CFD No. 3 IA 2), while taking into consideration
the following;
• The properties in CFD No.3 IA 2 are currently owned by two entities:
o Techbilt Construction Corporation (Techbilt)
o Kilroy
• The properties in CFD No. 3 IA 2 have been partitioned into three phases:
o Phase I
• Techbilt
• Kilroy
o Phase II
• Techbilt
o Phase III
• Techbilt
• The timing for the marketing of the parcels by ownership/phases involves a
consideration of their development status:
o Phase I first, followed Phase II and then Phase III
o Kilroy parcels for industrial and office users
o Techbilt properties for hotel and retail
The financial consideration for conducting the Market Absorption Study Supplement is
$3,825.00.
City Attorney Approved Version # 05.22.01
AGREEMENT FOR MARKET ABSORBTION STUDY SERVICES
EMPIRE ECONOMICS, INC.
THIS AGREEMENT is made and entered into as of the rsJ2.ff - day of
fO^u^LiL^. 2007, by and between the CITY OF CARLSBAD, a municipal
corporation, (^City"), and Empire Economicsfactfrporation, ("Contractor").
A-
RECITALS
A. City requires the professional services of a market absorption specialist
that is experienced in market absorption research and methodology.
B. Contractor has the necessary experience in providing professional
services and advice related to market absorption studies.
C. Selection of Contractor is expected to achieve the desired results in an
expedited fashion.
D. Contractor has submitted a proposal to City and has affirmed its
willingness and ability to perform such work.
NOW, THEREFORE, in consideration of these recitals and the mutual covenants
contained herein, City and Contractor agree as follows:
1. SCOPE OF WORK
City retains Contractor to perform, and Contractor agrees to render, those services (the
"Services") that are defined in attached Exhibit "A", which is incorporated by this
reference in accordance with this Agreement's terms and conditions.
2. STANDARD OF PERFORMANCE
While performing the Services, Contractor will exercise the reasonable professional
care and skill customarily exercised by reputable members of Contractor's profession
practicing in the Metropolitan Southern California Area, and will use reasonable
diligence and best judgment while exercising its professional skill and expertise.
3. TERM
The term of this Agreement will be effective for a period of one year from the date first
above written. The City Manager may amend the Agreement to extend it for one
additional one year period or parts thereof in an amount not to exceed Sixteen
Thousand Five Hundred dollars ($16,500.00) per Agreement year. Extensions will be
based upon a satisfactory review of Contractor's performance, City needs, and
appropriation of funds by the City Council. The parties will prepare a written amendment
indicating the effective date and length of the extended Agreement.
4. TIME IS OF THE ESSENCE
Time is of the essence for each and every provision of this Agreement.
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5. COMPENSATION
The total fee payable for the Services to be performed during the initial Agreement term
will be Sixteen Thousand Five Hundred dollars ($16,500.00). No other compensation
for the Services will be allowed except for items covered by subsequent amendments to
this Agreement. The City reserves the right to withhold a ten percent (10%) retention
until City has accepted the work and/or Services specified in Exhibit "A".
Incremental payments, if applicable, should be made as outlined in attached Exhibit "A".
6. STATUS OF CONTRACTOR
Contractor will perform the Services in Contractor's own way as an independent
contractor and in pursuit of Contractor's independent calling, and not as an employee of
City. Contractor will be under control of City only as to the result to be accomplished,
but will consult with City as necessary. The persons used by Contractor to provide
services under this Agreement will not be considered employees of City for any
purposes.
The payment made to Contractor pursuant to the Agreement will be the full and
complete compensation to which Contractor is entitled. City will not make any federal or
state tax withholdings on behalf of Contractor or its agents, employees or
subcontractors. City will not be required to pay any workers' compensation insurance or
unemployment contributions on behalf of Contractor or its employees or subcontractors.
Contractor agrees to indemnify City within thirty (30) days for any tax, retirement
contribution, social security, overtime payment, unemployment payment or workers'
compensation payment which City may be required to make on behalf of Contractor or
any agent, employee, or subcontractor of Contractor for work done under this
Agreement. At the City's election, City may deduct the indemnification amount from any
balance owing to Contractor.
7. SUBCONTRACTING
Contractor will not subcontract any portion of the Services without prior written approval
of City. If Contractor subcontracts any of the Services, Contractor will be fully
responsible to City for the acts and omissions of Contractor's subcontractor and of the
persons either directly or indirectly employed by the subcontractor, as Contractor is for
the acts and omissions of persons directly employed by Contractor. Nothing contained
in this Agreement will create any contractual relationship between any subcontractor of
Contractor and City. Contractor will be responsible for payment of subcontractors.
Contractor will bind every subcontractor and every subcontractor of a subcontractor by
the terms of this Agreement applicable to Contractor's work unless specifically noted to
the contrary in the subcontract and approved in writing by City.
8. OTHER CONTRACTORS
The City reserves the right to employ other Contractors in connection with the Services.
City Attorney Approved Version #11.28.06
9. INDEMNIFICATION
Contractor agrees to indemnify and hold harmless the City and its officers, officials,
employees and volunteers from and against all claims, damages, losses and expenses
including attorneys fees arising out of the performance of the work described herein
caused by any negligence, recklessness, or willful misconduct of the Contractor, any
subcontractor, anyone directly or indirectly employed by any of them or anyone for
whose acts any of them may be liable.
The parties expressly agree that any payment, attorney's fee, costs or expense City
incurs or makes to or on behalf of an injured employee under the City's self-
administered workers' compensation is included as a loss, expense or cost for the
purposes of this section, and that this section will survive the expiration or early
termination of this Agreement.
10. INSURANCE
Contractor will obtain and maintain for the duration of the Agreement and any and all
amendments, insurance against claims for injuries to persons or damage to property
which may arise out of or in connection with performance of the services by Contractor
or Contractor's agents, representatives, employees or subcontractors. The insurance
will be obtained from an insurance carrier admitted and authorized to do business in the
State of California. The insurance carrier is required to have a current Best's Key Rating
of not less than "A-:V".
10.1 Coverages and Limits.
Contractor will maintain the types of coverages and minimum limits indicated below,
unless City Attorney or City Manager approves a lower amount. These minimum
amounts of coverage will not constitute any limitations or cap on Contractor's
indemnification obligations under this Agreement. City, its officers, agents and
employees make no representation that the limits of the insurance specified to be
carried by Contractor pursuant to this Agreement are adequate to protect Contractor. If
Contractor believes that any required insurance coverage is inadequate, Contractor will
obtain such additional insurance coverage, as Contractor deems adequate, at
Contractor's sole expense.
10.1.1 Commercial General Liability Insurance. $1.000.000 combined
single-limit per occurrence for bodily injury, personal injury and property damage. If the
submitted policies contain aggregate limits, general aggregate limits will apply
separately to the work under this Agreement or the general aggregate will be twice the
required per occurrence limit.
10.1.2 Automobile Liability (if the use of an automobile is involved for
Contractor's work for City). $1,000,000 combined single-limit per accident for bodily
injury and property damage.
10.1.3 Workers' Compensation and Employer's Liability. Workers'
Compensation limits as required by the California Labor Code and Employer's Liability
City Attorney Approved Version #11.28.06
limits of $1,000,000 per accident for bodily injury. Workers' Compensation and
Employer's Liability insurance will not be required if Contractor has no employees and
provides, to City's satisfaction, a declaration stating this.
10.1.4 Professional Liability. Errors and omissions liability appropriate to
Contractor's profession with limits of not less than $1,000,000 per claim. Coverage must
be maintained for a period of five years following the date of completion of the work.
10.2. Additional Provisions. Contractor will ensure that the policies of insurance
required under this Agreement contain, or are endorsed to contain, the following
provisions:
10.2.1 The City will be named as an additional insured on General
Liability.
10.2.2 Contractor will obtain occurrence coverage, excluding Professional
Liability, which will be written as claims-made coverage.
10.2.3 This insurance will be in force during the life of the Agreement and
any extensions of it and will not be canceled without thirty (30) days prior written notice
to City sent by certified mail pursuant to the Notice provisions of this Agreement.
10.3 Providing Certificates of Insurance and Endorsements. Prior to City's execution
of this Agreement, Contractor will furnish certificates of insurance and endorsements to
City.
10.4 Failure to Maintain Coverage. If Contractor fails to maintain any of these
insurance coverages, then City will have the option to declare Contractor in breach, or
may purchase replacement insurance or pay the premiums that are due on existing
policies in order to maintain the required coverages. Contractor is responsible for any
payments made by City to obtain or maintain insurance and City may collect these
payments from Contractor or deduct the amount paid from any sums due Contractor
under this Agreement.
10.5 Submission of Insurance Policies. City reserves the right to require, at anytime,
complete and certified copies of any or all required insurance policies and
endorsements.
11. BUSINESS LICENSE
Contractor will obtain and maintain a City of Carlsbad Business License for the term of
the Agreement, as may be amended from time-to-time.
12. ACCOUNTING RECORDS
Contractor will maintain complete and accurate records with respect to costs incurred
under this Agreement. All records will be clearly identifiable. Contractor will allow a
representative of City during normal business hours to examine, audit, and make
City Attorney Approved Version #11.28.06
transcripts or copies of records and any other documents created pursuant to this
Agreement. Contractor will allow inspection of all work, data, documents, proceedings,
and activities related to the Agreement for a period of three (3) years from the date of
final payment under this Agreement.
13. OWNERSHIP OF DOCUMENTS
All work product produced by Contractor or its agents, employees, and subcontractors
pursuant to this Agreement is the property of City. In the event this Agreement is
terminated, all work product produced by Contractor or its agents, employees and
subcontractors pursuant to this Agreement will be delivered at once to City. Contractor
will have the right to make one (1) copy of the work product for Contractor's records.
14. COPYRIGHTS
Contractor agrees that all copyrights that arise from the services will be vested in City
and Contractor relinquishes all claims to the copyrights in favor of City.
15. NOTICES
The name of the persons who are authorized to give written notices or to receive written
notice on behalf of City and on behalf of Contractor under this Agreement.
For City:
Name: Lisa Irvine
Title: Finance Director
Department: Finance
City of Carlsbad
Address: 1635 Faraday Avenue
Carlsbad, CA 92008
Phone No. 760.602.2430
For Contractor:
Name: Joseph T. Janczyk, PH.D.
Title: Principal
Address: 35505 Camino Capistrano
Suite 200
Capistrano Beach, CA 92624
Phone No. 949.661.7012
Each party will notify the other immediately of any changes of address that would
require any notice or delivery to be directed to another address.
16. CONFLICT OF INTEREST
City will evaluate Contractor's duties pursuant to this Agreement to determine whether
disclosure under the Political Reform Act and City's Conflict of Interest Code is required
of Contractor or any of Contractor's employees, agents, or subcontractors. Should it be
determined that disclosure is required, Contractor or Contractor's affected employees,
agents, or subcontractors will complete and file with the City Clerk those schedules
specified by City and contained in the Statement of Economic Interests Form 700.
City Attorney Approved Version #11.28.06
Contractor, for Contractor and on behalf of Contractor's agents, employees,
subcontractors and consultants warrants that by execution of this Agreement, that they
have no interest, present or contemplated, in the projects affected by this Agreement.
Contractor further warrants that neither Contractor, nor Contractor's agents, employees,
subcontractors and consultants have any ancillary real property, business interests or
income that will be affected by this Agreement or, alternatively, that Contractor will file
with the City an affidavit disclosing this interest.
17. GENERAL COMPLIANCE WITH LAWS
Contractor will keep fully informed of federal, state and local laws and ordinances and
regulations which in any manner affect those employed by Contractor, or in any way
affect the performance of the Services by Contractor. Contractor will at all times observe
and comply with these laws, ordinances, and regulations and will be responsible for the
compliance of Contractor's services with all applicable laws, ordinances and regulations.
Contractor will be aware of the requirements of the Immigration Reform and Control Act
of 1986 and will comply with those requirements, including, but not limited to, verifying
the eligibility for employment of all agents, employees, subcontractors and consultants
that the services required by this Agreement.
18. DISCRIMINATION AND HARASSMENT PROHIBITED
Contractor will comply with all applicable local, state and federal laws and regulations
prohibiting discrimination and harassment.
19. DISPUTE RESOLUTION
If a dispute should arise regarding the performance of the Services the following
procedure will be used to resolve any questions of fact or interpretation not otherwise
settled by agreement between the parties. Representatives of Contractor or City will
reduce such questions, and their respective views, to writing. A copy of such
documented dispute will be forwarded to both parties involved along with recommended
methods of resolution, which would be of benefit to both parties. The representative
receiving the letter will reply to the letter along with a recommended method of
resolution within ten (10) business days. If the resolution thus obtained is unsatisfactory
to the aggrieved party, a letter outlining the disputes will be forwarded to the City
Manager. The City Manager will consider the facts and solutions recommended by each
party and may then opt to direct a solution to the problem. In such cases, the action of
the City Manager will be binding upon the parties involved, although nothing in this
procedure will prohibit the parties from seeking remedies available to them at law.
City Attorney Approved Version #11.28.06
6
20. TERMINATION
In the event of the Contractor's failure to prosecute, deliver, or perform the Services,
City may terminate this Agreement for nonperformance by notifying Contractor by
certified mail of the termination. If City decides to abandon or indefinitely postpone the
work or services contemplated by this Agreement, City may terminate this Agreement
upon written notice to Contractor. Upon notification of termination, Contractor has five
(5) business days to deliver any documents owned by City and all work in progress to
City address contained in this Agreement. City will make a determination of fact based
upon the work product delivered to City and of the percentage of work that Contractor
has performed which is usable and of worth to City in having the Agreement completed.
Based upon that finding City will determine the final payment of the Agreement.
Either party upon tendering thirty (30) days written notice to the other party may
terminate this Agreement. In this event and upon request of City, Contractor will
assemble the work product and put it in order for proper filing and closing and deliver it
to City. Contractor will be paid for work performed to the termination date; however, the
total will not exceed the lump sum fee payable under this Agreement. City will make the
final determination as to the portions of tasks completed and the compensation to be
made.
21. COVENANTS AGAINST CONTINGENT FEES
Contractor warrants that Contractor has not employed or retained any company or
person, other than a bona fide employee working for Contractor, to solicit or secure this
Agreement, and that Contractor has not paid or agreed to pay any company or person,
other than a bona fide employee, any fee, commission, percentage, brokerage fee, gift,
or any other consideration contingent upon, or resulting from, the award or making of
this Agreement. For breach or violation of this warranty, City will have the right to annul
this Agreement without liability, or, in its discretion, to deduct from the Agreement price
or consideration, or otherwise recover, the full amount of the fee, commission,
percentage, brokerage fees, gift, or contingent fee.
22. CLAIMS AND LAWSUITS
By signing this Agreement, Contractor agrees that any Agreement claim submitted to
City must be asserted as part of the Agreement process as set forth in this Agreement
and not in anticipation of litigation or in conjunction with litigation. Contractor
acknowledges that if a false claim is submitted to City, it may be considered fraud and
Contractor may be subject to criminal prosecution. Contractor acknowledges that
California Government Code sections 12650 et seq.. the False Claims Act applies to
this Agreement and, provides for civil penalties where a person knowingly submits a
false claim to a public entity. These provisions include false claims made with deliberate
ignorance of the false information or in reckless disregard of the truth or falsity of
information. If City seeks to recover penalties pursuant to the False Claims Act, it is
entitled to recover its litigation costs, including attorney's fees. Contractor acknowledges
that the filing of a false claim may subject Contractor to an administrative debarment
proceeding as the result of which Contractor may be prevented to act as a Contractor
on any public work or improvement for a period of up to five (5) years. Contractor
City Attorney Approved Version #11.28.06
acknowledges debarment by another jurisdiction is grounds for City to terminate this
Agreement.
23. JURISDICTIONS AND VENUE
Any action at law or in equity brought by either of the parties for the purpose of
enforcing a right or rights provided for by this Agreement will be tried in a court of
competent jurisdiction in the County of San Diego, State of California, and the parties
waive all provisions of law providing for a change of venue in these proceedings to any
other county.
24. SUCCESSORS AND ASSIGNS
It is mutually understood and agreed that this Agreement will be binding upon City and
Contractor and their respective successors. Neither this Agreement or any part of it nor
any monies due or to become due under it may be assigned by Contractor without the
prior consent of City, which shall not be unreasonably withheld.
25. ENTIRE AGREEMENT
This Agreement, together with any other written document referred to or contemplated
by it, along with the purchase order for this Agreement and its provisions, embody the
entire Agreement and understanding between the parties relating to the subject matter
of it. In case of conflict, the terms of the Agreement supersede the purchase order.
Neither this Agreement nor any of its provisions may be amended, modified, waived or
discharged except in a writing signed by both parties.
26. AUTHORITY
The individuals executing this Agreement and the instruments referenced in it on behalf
of Contractor each represent and warrant that they have the legal power, right and
actual authority to bind Contractor to the terms and conditions of this Agreement.
CONTRACTOR CITY OF CARLSBAD, a municipal
corporation of the State of California
City Manager or Mayor
ATTEST:
(print name/title)
^.^
IOR
City Clei
(e-mail address)
8
City Attorney Approved Version #11.28.06
If required by City, proper notarial acknowledgment of execution by contractor
must be attached. If a Corporation. Agreement must be signed by one corporate
officer from each of the following two groups.
*Group A. **Group B.
Chairman, Secretary,
President, or Assistant Secretary,
Vice-President CFO or Assistant Treasurer
Otherwise, the corporation must attach a resolution certified by the secretary or
assistant secretary under corporate seal empowering the officer(s) signing to bind the
corporation.
APPROVED AS TO FORM:
ROW
Deputy City Attorney
City Attorney Approved Version #04.01.02
EXHIBIT "A"
SCOPE OF SERVICES
City Attorney Approved Version #04.01.02
10
COMMUNITY FACILITIES DISTRICT NO. 3
IMPROVEMENT AREA NO. 2
CITY OF CARLSBAD
SAN DIEGO COUNTY, CALIFORNIA
MARKET ABSORPTION STUDY
SCOPE OF SERVICES
PREPARED FOR:
CITY OF CARLSBAD
MS. LISA IRVINE
PREPARED BY:
EMPIRE ECONOMICS, INC.
JOSEPH T. JANCZYK, PH.D.
APRIL 30,2007
Empire Economics 1 April 30,2007
City Attorney Approved Version #04.01.02
11
EMPIRE ECONOMICS, INC.
Economic-Real Estate Consultants
Joseph T. Janczyk, Ph.D.
35505 Camino Capistrano, Suite 200
Capistrano Beach, CA 92624
Phone:(949)661-7012
Fax: (949)661-8763
April 30. 2007
Ms. Lisa Irvine
Finance Director
City of Carlsbad
1635 Faraday Avenue
Carlsbad. CA 92003
Re: Market Absorption Study Scope of Services for the City of Carlsbad
Community Facilities District No. 3 Improvement Area No. 2
Empire Economics (Empire) is pleased to provide you with a Scope of Services for the Market Absorption Study
for the City of Carlsbad's Community Facilities District (CFD) No. 3 Improvement Area No. 2. hereafter referred
to as CFD No. 3 IA - 2.
The Scope of Services set-forth below for CFD No. 3 IA - 2 utilizes the same methodology that Empire has
applied to the credit structure underlying the numerous Bond Issues for other Business Parks and'or Master
Planned Communities with ADs/CFDs. including:
CFD No. 3 Improvement Areas No. 1 and also No. 2
AD No 2002-1 La Costa Greens and Bressi Ranch
AD No. 2003-1 Calaveras Hills and Robertson Ranch
Specifically, the Market Absorption Study is systematically integrated into the Appraisal as well as the Special
Tax Analysis. Considering the success of the Bond Offerings for these ADs/CFDs, including the above referenced
Bond Issues for the City of Carlsbad, this methodology was very well received in the municipal marketplace.
The Scope of Services is systematically discussed in the following manner:
> 1. Personnel Assigned to the Study and CDIAC Recommendations
> 2. Overview of the Credit Structure and the Role of Empire Economies' Research
> 3 Empire Economies' Experience with Land-Secured Public Financings
> 4. No Contractual Relationships with the Developers/Builders
> 5. Time Required to Complete the Study
> 6. Consulting Fee
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1. Personnel Assigned to the Study and CDIAC Recommendations
The principal consultant for the Market Absorption Study is Dr. Joseph T. Jauczyk. He will design the economic real
estate model for CFD No. 3 IA - 2 and present the conclusions to the City of Carlsbad and the Financing Team.
Additionally, he will be assisted by his staff, which will be responsible for the compilation of the economic and real
estate data required for the research and also conduct market field surveys. Furthermore, Dr. Janczyk will provide the
key results in a convenient format to each of the other professionals, and will discuss these with them, including the
Special Tax Consultant, the Appraiser and the Underwriter. Finally, the Market Absorption Study. Summary and
Delivery Letter will be distributed via E-Mail ia PDF format to facilitate its distribution and also its use in the Official
Statement
The California Debt and Investment Advisory Commission (CDIAC), of which the State Treasurer serves as chair,
published the Appraisal Standards for Land-Secured Financings (CDIAC Standards), with the input of municipal
finance professionals. Many California issuers have recognized the CDIAC Standards as a basis for the conduct of
appraisals under the Mello-Roos Act, as well as providing standards for market absorption studies Empire Economics
meets the minimum recommended qualifications as proposed by CDIAC for market absorption studies, with respect to
two key aspects: independence as well as qualifications and experience.
CDIAC Recommendations Empire Economics
Independence
1. Avoid Conflicts of Interest: Knowing that
developers and builders may influence the outcome
of a market absorption study, market absorption
analysts should describe their business relations with
developers and builders during the past three years in
the market absorption study.
1. Empire Economics conducts market absorption studies only for
governmental entities, and this has provided numerous public entities
with a high level of comfort. By comparison, other firms that provide
services to developers/builders may encounter ''conflicts of interest" in
trying to represent both the private and public sector*.
2. Empire Economics, as part of die Market Study, will sign a
Certification of Independence which includes the next two points.
* Empire Economics has not performed airy consulting services for the
District's property owners nor me developers/builders during at least the
past five+ years.
* Empire Economics will not perfonn any consulting services for the
District's property owners nor developers/builders during at least the
next three years.
QtialificatioNS and Experience
1. Educational Qualifications: The market absorption
analysts should possess at least a Bachelors degree but
preferably an advanced degree with courses in real
estate and economics.
2. Experience with Land-Secured Financings: The
market absorption analysts should possess a minimum
of five years of experience in performing market
studies for land-secured financings. Additionally, they
should be well versed in analyzing economic and real
estate data mat relates to the pricing and absorption of
properties contained within a CFD and through this
experience be capable of addressing issues unique to
land-secured financing, including the use of Price
Points in the Rate and Method of Apportionment.
Empire Economics
1. During the past twenty years, Dr. Joseph T. Janczyk, president of
Empire Economics, has prepared market absorption studies for more
than four hundred Planned Communities and Business Parks, providing
the comfort level required for numerous California counties, cities,
school districts, water districts and other special districts to finance over .
twelve billion dollars worth of capital improvement projects.
2. Dr. Janczyk received his Doctorate in Economics from the University
of California. As a tenured Economics Professor at California State
University, he taught courses in microeconomics, macroeconomics,
regional economics, and computer modeling. Dr. Janczyk has been a
featured speaker at numerous seminars including the Municipal Bond
Analysts, California Debt Advisory Commission, and California
Association of Realtors, and Moody *s Investor Services amongst others.
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2. Overview of the Credit Structure and the Role of Empire Economics* Research
The primary components of Empire Economies' Market Absorption Study and its utilization in the Bond Financing Credit
Structure are as follows:
Components of the Study Utilization of the Study
Market Demand Estimate Absorption/Final-Users
for the Parcels,
Appraiser Absorption-Discounted Cash Flow
Special Tax Analyst Amount of Special Taxes paid by
Developers Builders vs. Final-Users
So. Empire Economics will perform a Market Absoipuon Study, and this is then utilized by the Appraiser as well as the
Special Tax Analyst in formulating a credit structure underlying the CFD No. 3 LA - 2 Bond Issue that is consistent with
current/expected market conditions.
Methodology Underlying the Market Study
Based upon Empire Economics" experience in conducting more than four hundred Market Studies during the past twenty
years, the macroeconomic factors are regarded as being significant determinants of the actual performance of Planned
Communities, Business/Industrial Parks and Retail Centers, in the marketplace, and, as such, they represent a critical
component of the Market Absorption Study. With respect to the economic and real estate conditions underlying the
market demand for the products in CFD No. 3 IA - 2, Empire Economics will discuss the Southern California and San
Diego County economies and real estate markets; this is regarded as being a critical component of the Market Study, since
it provides prospective bond purchasers with a more accurate understanding of the market conditions underlying CFD No
3 IA-2.
The Marker Absorption Study starts with the identification of the expected product mix, and then proceeds TO arrive at an
estimate of the products' absorption, based upon a systematic analysis of the expected macroeconomic and
microeconomic conditions.
General Location of District and Identification of the Proposed Product Mix
The expected number of Business Park acres and the characteristics of the forthcoming business
products/properties will be identified based upon the planning approvals for the properties as well as the
development/marketing strategies of the property owners.
* Improvement Area 2 has one tax zone: some 150 net acres
* Development Status of the Properties in Improvement Area No. 1 with some 251 acres:
These properties/projects are expected to be competitive with the properties/project IIA No. 2, and so
they are analyzed in the Study.
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>• Macroeconomics Components
* To arrive at long-term employment forecasts. Empire Economics compiles information from economic
forecasts, that are available for the Southern California Market Region and its counties by University of
California Los Angeles (UCLA). Data Resources Institute (DRI) and Chapman University (CIS), among
others. The use of a Consensus Employment Forecast for the Market Region is substantiated by a
comprehensive study of forecasts that was conducted by the Federal Reserve Bank of New York which
concluded that Consensus Forecasts, defined as combining the forecasts of several firms or agencies, were
found to have a consistently higher degree of accuracy and reliability than any particular forecaster.
Empire Economics then uses these employment forecasts to derive estimates of the Southern California's
future demand for business properties during the foreseeable future.
* Next the proportion of Southern California's future employment, business-industrial, commercial-retail
and residential growth that is expected to be captured by the County of San Diego and the Market Area
for CFD No. 3 LA. - 2, the cities of Carlsbad, Oceanside and Vista as well as their nearby communities.
> Microeconomics Components
* The microeconomic analysis focuses upon the competitiveness of the products/properties in CFD No. 3
IA - 2, as compared to the competing Business Parks within the Market Area. The analysis deals with
various regional factors as well as the specific features/attributes of me District's products/properties.
* The changes in employment for San Diego County by various sectors are analyzed, since this provides an
overview of the demand for the various types of business-industrial product types.
* The Business Parks in the cities of Carlsbad, Vista and Oceanside are discussed, in order to provide an
overview of the competition that the properties/products in the CFD will encounter in the marketplace.
* The competitiveness of CFD No. 3 LA. - 2's business-industrial products is evaluated by performing a
systematic analysis of the expected characteristics of the products/properties in the District with the
comparable/competing Business Parks in the Competitive Market Area Specifically, this involves a
consideration of their respective locations, accessibility, parcel sizes, Special Taxes1 Assessments, and
other factors. The result of this analysis is the competitiveness, and hence the capture rate, for CFD No. 3
IA - 2"s products'properties in the marketplace.
> Absolution Schedules
The market absorption schedules for the business-industrial products/properties in CFD No. 3 LA - 2 are presented in the
following manner:
* Aggregate Absorption Schedule for CFD Xo, 3 IA - 2: This analyzes the marker
demand and supply conditions for the business-industrial products/properties for CFD No. 3
IA - 2. as a whole.
Specific Absorption Schedules by Product Types
* The overall absoiption schedules for the business-industrial products.'properties are
partitioned into each of their product types, in particular
Therefore, the Market Absorption Study systematically proceeds from the macroeconomic analysis of the CFD's Market
Region's future employment, population, and housing growth to the microeconomic analysis of the competitiveness of its
properties, and then arrives at the absorption schedules for each of the business-industrial products, including absoiption
schedules for CFD No, 3 IA - 2 and also each of its Improvement Areas and Zones, in particular.
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3. Empire Economics* Experience with Public Financings
Empire Economics is an economic and real estate consulting firm that specializes in conducting market absorption studies
on behalf of public entities for residential, commercial, and industrial projects located throughout California, with an
emphasis on Master Planned Communities. Business Parks and Retail Centers situated in Southern California, including
San Diego County, in particular.
Empire Economies' experience with municipal tax-exempt issues during the past twenty* years has been as follows:
> Mortgage Revenue Bond Financings: Over fifty issues with bonds amounting to more than $1.7 billion.
> Socioeconomic Forecast/Market Studies for the $2.750,000,000-4- refunding of the San Joaquin Hills and
Foothill/Eastern Transportation Corridors' Toll Roads located in southern Orange County; the latter was designated as
the Municipal Bond Issue of the Year for 1999.
> Mello-Roos/Assessment District Financings in which bonds have been sold: Over two hundred fifty issues with bonds
amounting to more than $2.5 billion. Empire Economies' Market Studies are typically for Planned Communities and
Business Parks which have 250-1,000+ housing units and/or 100-150 commercial-industrial acres.
> With regards to performing Market Studies for Business Parks, in particular. Empire lias conducted such studies for
the following:
> City of Carlsbad: Bressi Ranch: 2,16 million sq.ft. of office, industrial and other land-uses.
~> City of Oceanside: Oceanside Ranch Corporate Centre: 289 acres.
> City of Riverside: Sycamore Canyon and Riverwalk Commercial Business Park: 800 acres
> City of Ontario: Ontario Commerce Center: 500 acres
> County of San Bernardino: Kaiser Center: 452 acres
> Mello-Roos/Assessment District Financings that are presently in their formative stages: over thirty Bond Issues that
have forthcoming bonds amounting to $500+ million.
EMPIRE ECONOMICS - MUNICIPAL BOND ISSUES
(S BILLIONS)
Mortgage Revenue
B»a4», $1.70
SocioecotMiilic,
$2.75
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4. No Contractual Relationships with Developers/Builders
Empire Economics lias no past contractual relationship with the owners/developers/builders in CFD No, 3 IA - 2
Accordingly. Empire Economics, as part of the Market Study, will sign a Certification of Independence, as set-forth
below:
Certification of Independence
The Securities & Exchange Commission has recently taken action against Wall Street firms that have utilized their
research analysts to promote companies that they conduct business with, citing this as a potential conflict of interest
Accordingly, Empire Economics (Empire), in order to ensure that its clients are not placed in a situation that could cause
such conflicts of interest, provides a Certification of Independence. Specifically, this states that Empire performs
consulting services for pubic entities only, in order to avoid potential conflicts of interest that could occur if it also
provided consulting services for developers/builders. For example, if a research firm for a specific Community Facilities
District, were to provide consulting services to both the public entity as well as the property owners'developers builder.
then a potential conflict of interest could be created, given the different objectives of the public entity versus the property
owners/developers.
Accordingly, Empire Ecoaomics certifies that the Market Absorption Study for CFD No. 3 IA - 2 of the City of Carlsbad
was performed in an independent professional manner, as represented by the following statements:
> Empire was retained to perform the Market Absorption Study by the City of Carlsbad, not the District's
property owners or the developers/builders.
> Empire has not performed any consulting services for the District's property owners nor the
developers-builders, during at least the past five years.
> Empire will not perform any consulting services for the District's property owners nor the
developers/builders, during at least the next three years.
> Empire's compensation for performing the Market Absorption Study for CFD No. 3 IA - 2 is not contingent
upon the issuance of Bonds; Empire's fees are paid on a non-contingency basis.
Therefore, based upon the statements set-forth above, Empire hereby certifies that the Market Absorption Study for CFD
No. 3 IA - 2 of the City of Carlsbad was performed in an independent professional manner.
Empire Economics, Inc.
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5. Time Required to Complete the Study
Since Empire Economics has a background in performing Market Absorption Studies for Community Facilities Districts,
the proposed time schedule allows for an interaction with the financing team, so that the final study is utilized in a timely
and effective manner. Accordingly, Empire Economics will deliver the Market Absorption Study for CFD No. 3 IA - 2
according to the following time schedule:
Draft Market Absorption Study June 4, 2007
Final Market Absorption Study June 18, 2007 (two weeks later)
Furthermore, Empire will make reasonable efforts to complete the Draft and Final Market Study prior to the timelines set-
forth above, in order to expedite the financing process.
6. Consulting Fee
Empire Economies' fee schedule is based upon the costs of providing consulting services for a Market Absorption Study
(Market Study) that is appropriate for a Municipal Bond Financing Specifically, the comprehensiveness and scope of
these consulting sendees are obtained from discussions with prospective bond purchasers, the Bond Funds. Empire
Economics maintains contact with the Bond Funds through seminars, meetings, and telephone conversations.
Accordingly, the consulting fee covers all of the services listed below:
> Comprehensive Market Study for Official Statement (PDF Fonnat)
> Discussion of Absorption with Appraiser
> Discussion of Absorption with Special Tax Analyst
> Certification to Use Market Study Summary for Bond Offering
"'r- Discussion of Market Study with the Underwriter to Facilitate Marketing Bonds
"r General Liability and Errors 'Omissions Insurance
> Promptly Respond to Queries from Prospective Bond Purchasers
Accordingly, the financial consideration for conducting the Market Absorption Study for the City of Carlsbad's CFD No.
3 IA - 2 is now discussed.
Although the Market Study covers only IA No. 2, it also performs an analysis of the developmemVmarketmg status of the
properties in IA No. 1, since these are competitive with the forthcoming projects/products in IA No. 2. Furthermore, more
than a year has passed since the prior Market Study, dated December 2005, and so current economic and real estate data
needs to be compiled.
Market Absorption Study ConsnMing Fee: $16,500
(Note: The consulting fee is lower than the fee for the original Market Study in December 2005)
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Closing Remarks
Empire Economics is well suited to pejform the Market Absorption Study for CFD No. 3 LA - 2 based upon the
following:
f- Strong professional credentials.
> Extensive experience with land-secured financings.
> Credibility with rating agencies/bond funds.
> Competitive fee structure.
> Capability of completing the Study in a timely manner.
> Protect Issuer from Potential Market Study Liability.
If you have any additional comments or considerations, please contact me as I would be pleased to respond to them.
I am looking forward to assisting you with the Bond Financing for CFD No. 3 IA - 2.
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