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HomeMy WebLinkAbout1982-09-21; City Council; 7129-1; SELECTION OF BOND COUNSEL AND A BOND UNDERWRITER FOR HOUSING MORTGAGE REVENUE BOND PROGRAMa d ,-d r ,4 CIT F CARLSBAD - AGENDA ILL k- AB~LZF!? TITLE DEPT. HD.@ ~~~g/71/87 SELECTION OF BOND COUNSEL AND A BOND UNDERWRITER CITY A~Y_II! DEPT.BLDG&PLNG. FOR HOUSING MORTGAGE REVElilUE BOND PROGRAM. 0 CITY MGR.: t I I I RECOMMENDED ACTION: City Counci 1 approve Resolution No. 70 / 8 selecting Stradling, Yocca, Carl son and Rauth, as Bond Counsel for the City's Mortgage Revenue Bond Program and approv Resolution No. 0 selecting Blyth, Eastman, Paine Webtier as Financial Underwriter for =t the ity's Mortgage Revenue Bond Program, ITEM EXPLANATION: On August 17, 1982, the City Council directed the City Attorney and Director of Building and Planning to solicit proposals for services from Bond Counsel and Bond Financial Underwriters for the purpose of packaging a multi-family and single-family mortgage revenue bond issue. As a result of this process, staff is recommending that the firm of Blyth, Eastman, Paine Webber be selected as the City's Bond Underwriting consultant. A memorandum from Mr. Orenyak discussing the underwriting recornmendation is attached. Proposals have been received and reviewed by the City Attorney and staff for the position of bond counsel. It is recommended that Mr. John i4urphy of the firm of Stradling, Yocca, Carlson and Rauth be selected as the City's Bond Counsel for themortgage revenue bond program. A memorandum from the City Attorney regarding the bond counsel recommendation is attached, FISCAL IMPACT: Bond Counsel and Underwriter will be paid out of bond proceeds and/or upfront fees from developers. Council can ask that any staff administrative costs be reimbursed from bond fees. City will incur no financial liability no matter what the disposition of bonds. EXHIBITS: a u >. 0 fx e a .3E 2 0 F 0 a 5 z 0 3 0 A - Memorandumfrom City Attorney B - Memorandum from Director of Building and Planning C - Resolution No. selecting Underwriter. D - Resolution No. 7 0 selecting Bond Counsel. 3!E I 0 0 EXHIBIT A MEMORANDUM DATE : September 13, 1982 TO : Mayor and City Council FROM: City Attorney SUBJECT: BOND COUNSEL FOR HOUSING BOND ISSUES The City Council at your meeting of August 24, 1982 directed your Attorney and the Director of Building and Planning to solicit proposals for bond counsel and underwriting services for a proposed multifamily and single family mortgage revenue bond issue. In response to that direction our office solicited proposals from three law firms - Stradling, Yocca, Carlson & Rauth; Orrick, Herrington & Sutcliffe; and Best, Best & Krieger. The proposals are essentially the same in the services to be rendered. However, Orrick and Stradling have both had extensive experience in public financing in general and particularly in the field of housing financing. Best, while a fine firm, has done most of its financing work in special assessments and has had somewhat limited experience in the housing field. All three firms work on a contingency basis with their fees payable from the bond proceeds. They all also provide that if the bond issue is not completed they will receive a reasonable fee based the City, by developers interested in participating in the financing. Their fee quotations are as follows: on the hourly rate to be paid out of developer fees deposited with Stradling Orrick Best 1M 1 1/2% 1M 2% 1M 1% 1-5 1/4 1-5 1/2 1-25 1/4 5-10 1/5 5-25 1/4 25-50 1/8 1 o+ 1/20 25+ 1/10 50+ 1/12 The Orrick firm is fully qualified in every respect. However, their fee quotation was higher than the other two and they are not recommended for that reason. The first part of Best's quotation is lower than Stradling, but the balance is slightly higher. However, wm did not compute the actual difference since, in our opinion, Council should accept the Stradling proposal because of (1) the clear advantai in experience that Stradling has with housing bond issues; (2) the investment they have already made in the project by attending a numbe of meetings with City staff and interested developers; and (3) the fa that Mr. Orenyak indicates most of our interested developers know of 1 have worked with the Stradling firm and have confidence in their ability to successfully complete the project. It is the recommendation of our office that the City Council adopt a resolution accepting the proposal of Stradling, Yocca, Carlson & Rauth for bond counsel services. >il VINCENT F. BIONDO, JR. 0 0 STBADLING, YOCGA. GABLSON 8c RAUTH FRITZ R. STRADLING A PROFESSIONAL CORPORATION NIGH E. Yocca G. GRAIG CARLSON W1ur.m R. RAUTH m ATTORNEYS AT LAW SUITE 800, UNION BANK BUILDING K. G. Sclzaap 610 NEWPORT CEKTER DRIVE RICHARD G. Goon- THOMA5 Pa GLARE, JB. NEWPOBT BEACH, CALIFORNIA 92060-0080 DA~D R. MCEWEN JOHN E. BRECKENRIDGE OF CQUNS€L JOHN J. MmPm ?OST OFFICE; BOK 7669 BEN A. FRYDXAX TELEPHONE (714) 640-7035 DEREK W. HUNT PAUL L. GALE M. D. TALBOT BRUCE G. STUART DOUGLAS F. HIGHAM E. Kum YFAGEE DAR~ H. GARLSON -I. J. Snmu B. ADaM ALllsox BRUCE FEUCWTEB .LAWRENCE D. F~ENZEL S. KATHLEEN LEE September 9, 1982 City of Carlsbad 1200 Elm Avenue CarPsbad, California 92008 Attention: Mr. Marty Orenyak Dear Mr. Orenyak: It is our understanding that the City of Carlsbad (the "City") may wish to consider a proposal pursuant to which this firm would serve as bond counsel for the City in connection with its proposed issue of multi-family housing revenue bonds (the "Bonds"). We would be very pleased to be engaged in that capacity. This letter describes the services we would be prepared to render as bond counsel and the fee which we would expect to charge for such serviceso Our primary responsibility as bond counsel is to render an opinion in connection with the issuance of the Bonds to the effect: (i) that the Bonds have been properly authorized and issued and are valid and binding obligations; (ii) that the essential sauces of security for the Bonds have been legally provided for, and (iii) that the interest on the Bonds is exempt from federal and California income taxation. However, in the process of reaching the point at which we have prepared a record sufficient to enable us to render this opinion; we are usually called upon to perform a number of related functions. The services we would expect to render for programs of the City would fall into two categories: (a) research and interpretation of applicable laws, conferences with City staff and counsel, and consultation with financial. advisors, underwriters, lend- ers, developers and other experts retained by the City for planning and developing the housing program, and (b) a prepara- tion of documentation and supervision of all steps to be taken prior to the issuance of the Bonds. e 0 City of Carlsbad September 9, 1982 Page 2 ~n the flrst category, or plannkng cC~~A, Wd would Q!lpQ@t 1 (i) to research applicable laws and ordinances relating to the proposed program, including laws relating to the State of California and the City, tax laws, securities laws and other laws that may be applicable; (ii) to attend conferences and consult with City staff and counsel regarding such laws; and (iii) to participate with any financial advisors, underwriters, developers and ot'ner experts retained by the City in structur- ing the financing. In the second category, that of preparing for the issuance . of Bonds, we would draft all basic documents relating to the issuance and security of the Bonds in consultation with the City, its counsel; and financial advisors, underwriters; lend- ers, developers and other experts- We would also provide ser- vices in connection with relevant provisions of the Internal Revenue Code and tax regulations; including preparing various documents relating to the regulations promulgated under the Code. Additional specific services in the second category would include (i) preparation of the record of proceedings for authorization, sale and issuance of the Bonds; (ii) preparation of documents relating to the financing, including the developer agreements, the loan agreements, the sale, service, and admin- istration agreement, and the indenture: (iii) assistance the preparation of the official statement and supporting documenta- tion relating to the. offering for sale of the Bonds; (iv) review of the mortgage cash flow analysis submitted by the underwriters; (v) participation in the negotiations relating to and drafting of the Bond purchase contract or the bidding docu- ments: (vi) attendance at information meetings and other con- ferences scheduled by the City, the financial advisors or the underwriters; (vii) consultation with prospective purchasers, their legal counsel and rating agencies; (viii) consultation with the City Attorney concerning any legislation or litigation during the course of the financing; (ix) consultation with the trustee ar,d counsel to the trustee; (x) preparation of the form of the Bonds and supervision of their production or printing, signing, authentication and delivery; (xi) rendering of the final approving opinion as to the issuance: and (xii) rendering of necessary collateral legal opinions as to the inapplic- ability of the registration requirements of federal securities laws and other matters related to the issuance of the Bonds. Our fee for said services would be computed according to the following schedule and would be payable from Bond proceeds (except if the proceedings were abandoned): 3045P/2062/03 4 e e City of Carlsbad September 9, 1982 Page 3 Total Principal -Amount of Bonds Sold Fee - $1,000,000 or less $15,000 $1~000~001 to $S,OOO,OOO $15,OOOj plus 1/4 of 1% of excess over $1~000,000 $5,000,001 to $10,000,000 $25,000, plus 1/5 of 18 of excess over $56000,000 More than $10 e OQO j 000 $35,000 plus 1/20 of 1% of excess over ~lO;OOO,OOO In addition to the foregoing fee, we would receive reimburse- ment for other out-of-pocket expenses, such as telephone charges, delivery charges, telegrams, traveling expenses, clerical and stenographic overtime, charges for duplicating, and similar charges. In the event the proceedings were to be abandoned, we would be paid a fee determined by the City to be a reasonable fee based upon the hourly rates of the attorneys undertaking the work, provided that such fee would be payable only from developer application fees collected by the City, if any, and wocld not otherwise constitute an obligation of the City. If the services and compensation set forth in this letter are satisfactory to the City, its acceptance noted on a dupli- cate of this letter and delivered to us shall show the agree- ment between usI Very truly yours; STWLING, YOCCA, CARLSON & RAUTH /' JJM : pw cc: Vincent F. Biondo, Jr. j City Attorney Accepted this 21st day of SP-r , 1982. CITY OF CARLSBAD BY 3045?/2062/03 NARY H. CAS=, Mayor e e MEMORANDUM DATE : September 10, 1982 TO : Frank A1 eshi rr- i ty Manager FROM : Marty Orenya rector of Building and Planning SUBJECT: SELECTION OF NORTGAGE REVENUE BOND UNDERWRITER This report outlines the evaluation process used by the City in selecting a Mortgage Revenue Bond (MRB) financial udnerwri ter. The following firms were contacted in writing (Attachment A) and requested to submit a written proposal and schedule.an interview: Blyth Eastman Pine Webber Inc., Shearson/American Express, Inc. Stone and Youngberg Mi 11 er and Schroeder A. G . Bec ker Birr, Wilson and Co., Inc. Rauscher Pierce Refsnes, Inc. Interviews were scheduled for Friday, September'3, 1982-.(Attachnlent B. ) The Director, Jim Elliott and Director of Building and Planning, Marty Orenyak. Interviews consisted of introductions, a brief explanation of the City's interest in tax-exempt bonds and an ongoing exchange of questions, explanations and comments between firm representatives and the City interviewing team. Each firm was evaluated by the members of the interviewing team based on: 1) Experience, 2) service, 3) Cost/apporach and 4) accessibil i ty/workload. Written proposals were similarly evaluated for each firm. interview panel consisted of Councilmember Girard "Lefty" Anear, Finance INTERVIEW RESULTS AND RECOMMENDATION Interviewers felt that all firms interviewed could adequately provide the requested services. All firms demonstrated sufficient expertise and experience in the field of Mortgage Revenue Bond financing and marketing. The firm of Blyth, Eastman Paine Webber was rated the highest and asked to return on September 10, 1982 for an additional interview. EXHIBIT - B Mortgage Revenue Bond election ' page 2 r) e At that time a panel consisting of Mayor Casler, Councilmember Chick, City Attorney, Vince Biondo and Director of Building and Planning, Marty Orenyak; conducted an informal -interview with the firms representatives. It is the consensus of the interviewers that the firm of Blyth, Eastman, Paine Webber can best serve the City's financial underwriting needs and should be retained in that capacity. M0:al .. 1 21 3 4 5 6l e 0 RESOLUTION No. ,7018 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, AUTHORIZING THE RETEttTION OF THE FIRM OF STRADLItJG, YOCCA, CARLSON AND RAUTH, ATTORNEYS AT LAW, AS BOND COUNSEL FOR THE CITY'S MORTGAGE REVENUE BCND PROGRPM. I ~ ~ WHEREAS, the City Council of the City of Carlsbad desires to retain 'I bond counsel for the City's Mortgage Revenue Bond -Program; and 8 WHEREAS, the fir5 of Stradling, Yocca, Carlsons and Rauth, Attorneys at 9 Laws have submitted a proposal for the provision of such services, which is 3.0 incorporated herein as though fully setforth as Exhibit B. 1'9. NOW THEREFORE, be it resolved by the City Council of the City of Carlsbac 12 that: l3 I 1) The above referenced Facts are true and correct; and 24 15 2) City Council accept the proposal and authorize retention of Stradl in: Yocca, Carlson and Rauth as Bond Counsel for the C5 ty's Mortgage Revenue Bond Progrzm. 16 19 wit: 18 Council held on the 21st. day of s-r 1982, by the following vote to 17 PASSED, APPROVED AND ADOPTED at a regular meeting of the Carlsbad City AYES : comcil ms Ca-sler , &wis and Wear 20 I ' NOES: None 25 22 I fi,lL&% Qae i4 74t&-.L. @LdL./ ABSENT; Couixcil P4erhrs Qlick and Kdchin MARV+~, Mayor 23 i 25 1 1 ALTHEA RAuTEwmz, Ci ty GeT\ EXHIBIT D 26 (seal) - 27 I//// 28 //// 1 ‘, , 4* I1 I 1 1 2 3 1p, 5 Ir) 0 RESOLUTION NO. ,7019 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, AUTHORIZING THE RETENTION OF THE FIRM OF BLYTH, EASTMAN, PAINE WEBBER, AS UNDERWRITER FOR THE CITY’S MORTGAGE REVENUE BOND PROGRAM. 6 WHEREAS, the City Counci 1 of the City of Carlsbad desires to retain an ‘7 underwriter for packaging services for a fdortgage Revenue Bond program; and 8 WHEREAS, the firm of Blyth, Eastmm, Paine Izrebber, has subtnitted a 9 WHEREAS, proposal s have been sol i ci ted from several. .underwri ting fi rms. 10 -in the City Clerk’s Office. 12 incorporated herein as though fully set forth, as Exhibit A which will be C\H 7‘ 11 proposal for the provision of services, which is attached hereto and 13 NOW, THEREFORE, be it resolved by the City Counci 1 of the City of Carl sbai 14 that: Is /I 1) The above referenced facts are true and correctg and 16 17 la I 2) That we accept the proposal and authorize the retention of Blyth, Eastman, Paine h‘ebber as Mortgage Revenue Bond Underwriter firm. 3) That the tllayor of the City of Car?sbad hereby authorize and direct staff to execute said agreement, I 1-9 vote, to wit: 21 City’ Comci i held on the 21st day of Septerdxr 1982, by the fol lowing 26 I PASSED, APPROVED AND ADOPTED at a regular meeting of the City of Carlsbad 22 ABSENT: COUnCil &?IdxrS Chick md Kuldlin 24 NOES’: ne i 23 AYES : Comcil 14mkers Casler , I~wis, and paear I 25 cff* b &I y p ,/L-?+&.” PiARY CASbfK, klayor “uI_ 28 (Seal ) EXHIBIT - C . t