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HomeMy WebLinkAbout1983-05-10; City Council; 7129-3; Economic Feasibility Study1. CIFQF CARLSBAD - AGEND~ILL AB#- TITLE ACCEPTANCE OF. PROPOSAL FOR ECONOfIIC MTG. 51 10/83 DEPT. -EM I FEASIBILITY STUDY FOR MORTGAGE REVENUE BOND PROGRAt? DEPT. HD.~ CITY ATPI, CITY MGR.d I RECOMMENDED ACTION: I Adopt Resolution 7-2 /'7 accepting proposal of Empi re Economics for Market ~easibility study for a llortgage Revenue Bond program. ITEll EXPLANATION On September 21, 1982, Council authorized an official request to the State of California for a single family Mortgage Revenue Bond Allocation. Staff has met with developers a.nd is progressing toward a bond issuance. A Market Feasibility Stud.y must be performed prior to'packaging the bond program. A total of five firm were considered using the following criteria as the basis for recommendation 1) Cost of Services 2) .Experience with Mortgage Revenue Bonds in California 3) Experience in performing area income studies I. Based on this criteria the City ' s Bond Underwriter and Bui 1 ding and Planning Director recommend the firm of Empi re Economics. (See proposal Exhibit I-) FISCAL IMPACT Participating developers have $55,000 on deposit with the City that can be used for this project. I EXHIBIT2 I I- Letter dated May 2, 1983, from Blyth Eastrnan Paine Webber. n > w 0 E a. 8. < 2 0 F 0 4 d 8 z 3 2- Resolution # -72 1'7accepting proposal of Empi re Economics to perform an Economic Feasibility Study for the Yortgage Revenue Bond Program. .- 1 , 0 0 Exhibit I !. BLYTH EASTMAN PAINE WEBBER INCORPORATED 555 CALIFORNIA STREET SAX FRANCISCO, CALIFORNIA 94104 - 415-368-8000 4czqq 3 2L May 2, 1983 u.. %rty brenyalc Director Building and Planning City of Carlsbad CarXsbad, CA 92008 1200 Elm Avenue M4Y 3 .7383 m?)? cTy &?#$ QF .C.QC 47.7 5 i?&J2 vodD Re: Recarmendation €or feasibility consultant for proposed City of Carlsbad single family mortgage revenue bonds. Dear Nlarty : I have reviewed a nunber of proposals for feasibility consulting services for the City's prospective single family issue. A total of five firms were considered using the following criteria as the basis for recarmendation: 1) cost of services 2) experience with mortgage revenue 3) experience in performing area X ..-. bonds in California income studies The following firms were sent requests €or proposals: Firm Principal location Closson Market Research Group Ramseyer, Zerbst & conq?any Plantech Corporation The Land Econanics Group Bnpi re Economics Sacramento San Francisco Jacksonville, Florida San Francisco Redlands The lowest bid received ($7,800) was frcm the Closson Group, though their location and lack of mortgage revenue bond experience raised sane concerns. On the basis of experience in t'ne San Diego County area and overall feasibility consulting expertise, Ramseyer & Zerbst was the frontrunner. Hmever, their bid of ($12,000) seaned out of line for the services being requested. ~FJO firms had bids roughly in between the high and the low, Plantech and Land Econanics. Both of their bids as well as their respective levels of experience are canpetitive though location and slightly higher costs placed then out of contention. As a result, I m recmnding mire I- ', 0 0 Mr. Or enyak Nkty 2, 1383 Page two Economics, whose bid of $8,500 ($7,000 without extra studies) is the second lowest of those received and whose experience is cmnsurate with the other top firms under consideration. In addition, they are the only southern California based firm that responded. Should you have any questions on any of the enclosed, please let me know. Very truly yours, "AL/L, Stephen L, Hicks SLH:sll ..,- *.. . - c- 'L 1, 1 2 3 4 e e. RESOLUTION NO. 7217 i A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, ACCEPTING THE PROPOSAL OF EMPIRE ECONOMICS TO PERFORM AN ECONOMIC FEASIBILITY STUDY FOR THE MORTGAGE REVENUE BOND PROGRAM. 5 WHEREAS , proposals have been received by the City of Carl s bad for a Mar 6 Feasibility Study for the Mortgage Revenue Bond Program; and 7 WHEREAS, the firm of Empire Economi.cs has submitted a proposal of $8,5C 8 for this purpose; and 9 WHEREAS, the C5 ty's Bond Underwriter, and Director of Building and P1 an 10 are satisfied that Empire Economics can produce the desired study; and 11 WHEREAS, the City has $55,000 in good faith deposit from developers tha 12 NOW, PHE!lEFORE, BE IT RESOLVED, by the City Council of the City of Carl s 13 can be used for this purpose. California, as follows: 14 15 16 17 1. The above recitations are true and correct. 2. The proposal by Empire Economics for an Economic Feasibility Study (.attached hereto and made a part hereof) is hereby accepted and the I Mayor is authorized to execute a letter stating such acceptance. 1 18 at a regular meeting held on this 10th day of May, 1983, by the following vot 19 PASSED, APPROVED AND ADOPTED by the City Council of the City of Carlsba to wit: 20 21 22 23 24 25 26 27 I 28 1 AYES: Council I'43bers Casler, Lewis, Kulchin, and Prescott NOES : None ABSENT: Council Member Chick ATTEST : ~ 1 %,d 4z-A MARY H. ASLER, Kayor I -. , 0 - d4 . * Gm+ Gco*Loxn& *..’ . 6- Luh * $”. $-& Bb.9. 749 %&ins&-, 9de %dLnCik, CaP&nia 92373 , . y&&: (71.~1 793-8245 .. .. I April 1, 1983 .. *. . . d .. Mr. Marty Orenyak . City of Carlsbad 1200 Elm Avenue ., . Carlsbad, CA 920.08 . Re: Market Demand, Income, and Average Area Purchase Price Studies for the City of Carlsbad’s Mortgage Revenue Bond Issue Dear Mr. Orenyak: *. This letter will serve as a proposal, and upon execution, an Agreement regarding the Market Demand, Income, and Average Area Purchase Price Studies for the City of Carlsbad’s Mortgage Revenue Bond Issue. Accordingly, this Agreement will provide you with a description of the research that shall be conducted, along with the performance schedule and financial considerations for .. the studies. Background . Empire Economics is a firm specializing in market demand studies for residential, commercial and industrial projects located throughout southern California. Recently, we conducted market demand studies for mortgage revenue bond issues for San .Bernardino County, Riverside County, Palm Springs, Oceanside, Montclair, Rancho Cucamonga, Ontario and Azusa,’ as well as market; demand studies for improvement bonds for Ontario and Corona. Additionally, we have published articles on housing in various professional journals and also have articles in the Los Angeles Times Real Estate Section, from time to time. Description ” of Economic Research Market ” Demand - Study I The primary objective of the Market Dema,nd Study is to determine the market absorption of the project(s) in the Carlsbad Mortgage Revenue Bond Issue. This will be accomplished through a professional and comprehensive analysis of all of the relevant factors, including: . :y 1%. .I Y .", , ,* . 1 @ : ', e Mr. Marty Orenyak April 1, 1983 Page Two 9c The growth prospects for Carlsbad's primary economic . bases, local industry and commuters from San Diego, are . assessed, to forecast its expected population and employment growth over the 1983-90 period. * . The expected' population growth i?~ Carlsbad is then used to determine the amount'"of housing demand over the 1983-85 period. The composition of this demand by. product type is derived using the distribution of income for households in Carlsbad. Next, the forecast-----o-f housing demand is adjusted to reflect the various..federal and state criteria that the purchasers rnr;st fulfill. ..' g",2..-~i"".""- -......"-.:,"x?"-;- _-.- ". -.7p.-:...v .- >: . . . ..i i .-.;;. .j 46 J .. I. , . .s .I &..j * The supply'..of housing 'is then analyzed, according to housing units completed and under construction, as well ,as projects that may come on the market in the near future. While ....-.- the., ~ __ ,.. competitiveness of the active projects involves a considerht'ion '0-f "their location, product. types, 'andWfeatures,. the. key fac'tor determining their absorption is the financing that they offer, so this is analyzed comprehensively. Additionally, the . projects in the mortgzge revenue bond'.'programs of other cities in the market area are also analyzed, i.e., Oceanside. . ,f .--I. . .>I z .' . .:g i': I . . .. .; _,_. . ,.+.,-".. , . ,: . ' '."7 ,. . .%..Fm"*-;y .,. e-.,. ', ., .. ' . ' * ' The compe'titiveness' of the project(s) in the Carlsbad . Mortgage- Revenue Bond Issue will be assessed, in terms of its location, product type;-' price, features, and amenities, and, of cqurse, the special financing that it will be able to offer through the mortgage revenue bond .program. &- I -:-d. . , J ..'!., 2 ' "%p.",-..?? ? r ~ _. ?'- ,. . +.. . .. f 3$ Finally, based- -upon a careful co6sideration of all of the. housing demand and supply conditions during the 1983-85 period, along with the special criteria that the purchasers must fulfill, the absorption sch,edule for the projects in the Carlsbad Mortgage Revenue Bond Program is determined. Therefore, the Market Demand Study will perform a comprehensive . .analysis of all of the. relevant economic and housing market conditions that will affect the.sucdess of the Carlsbad Mortgage Revenue Bond Issue. Additionally, the key conclusions of the . market demand study will be summarized in an Executive Summary. 7-4. * a " ,' . * 'e Mr. Marty Orenyak April 1, I983 Page Three e. Income Study .. The. Income Study will perform an analysis of the three alternative measures of income to determine which of these is the highest: the statewide median household income; the county-wide median household income; or the median family .income for the San Diego's SMSA. Then, the relevant i-ncorne statistics will be up- dated to 1983 and also forecasted for 198y-85. ., 2, _I r-: . '' q.&y According to the Safe krbo$"Purchase Price Limits, the maximum - . Average " Area - Purchase Price Study ,*;; .< , .- , :z ,' ' ..,;a . 'price for housing units in.Carlsbad*s Mortgage Revenue Bond Program would be approximately $115,000, However, based upon a recent Average Area Purchase Price Study by Empire Econonics, the San Diego's SMSA's average purchase . price was approximately $130,000. The computations by Empire Economics we:re based upon a comprehensive sample of some 6,000 sales in the SMSA, ' as compared to the Safe Harbor's sample.,,o,f. ,. less than 500 sales. 32 j . :. -.$ Research' - Performed I b:y I -. a professional' ..f .$. '? The President of Empire Economics, 'Joseph Janczyk, holds a Ph.D. in economics with specializations,'in regional economics and forecasting, and is also an economics professor at California State College, San Bernardino. Although hei is backed by a highly trained staff that- provides support~..in terms of compiling data and clerical assistance, every study is actually researched and written by Dr. Janczyk. Due to this unique situation, ydur project is provided with the highest"'leve1, of professional research possible. i .: -2 ,II f .. g,*;.'..' ;. ~ ; . - . < .'.-<( .... . ...L, . >: ... .4 , 1, , - :. .. ; . . G ,. . ". :, .. I * Performance Schedule.' ,; ,e ' a "_ - - - - "" "" .I The research for the Mark-et Demand Study is .,expkcted to commence on or about April 15, 1983 and be completed no later than four weeks thereafter- Progress reports will be provided upon request, if so desired. This time schedule takes into consideration the other mortgage revenue bond programs that we are presently involved in. Consequently, we will be able to devote our full attention and efforts to Carlsbad's mortgage 'revenue bond program. 1-i L. . I. 1.I * . e Q . /I Mr. Marty Orenyak April 1, 1983 Page Four - .e .. ,. I F:rianc?al Cons!deraC!ons , "1 The.fees for the Market Demand, Income, and Average Area Purchase Price Studies, along with the payment schedule, are as follows: ~~~.~~.~~.";',--~:!~~~"~~li*.~."~c~,-~~ '.:.-A'. .. , . .. . .:$ : rrotal I..;.d;lij%;**._I;. I.. ' . , 'I *.I .,..., -*< Final Study $ &-Fee ,I., '_ : :f 1 Retainer Payment :,.'." L . . ,~. ..' ~ ,. ' i: "__I ,. IF - your Mortgage Revenue Bond Issue q -..d*.-,...I ;. ._, *.-.'. .%' : :.ii .I . ~,. . ., . . .. . j. , z' .. . .. ' . .2:;y ' : :., ;;, , r' t :A7: ' pyl[-k! J1-s- ph UT. &I 2. . . .:? .. . '. I ':iT ,$ _I -\I. :. $;:; k4 . , 5 L fl ;,/ n zyk, Ph.D. . ,j 'I j::. . . :$ - c nomic ultant JTJ :re "./" ., . :, 4,~ ..ji *$: :t +,-e . , ,! .. , ' f L "*"y~~?&?'' ' .I . ' .> ~~~~~~~-~:~~~~~~,~~;~~~~;~~~,,.~.,;~.~,~*~~~ ' a. - APPROVEL;: APPROVED : - fl - S.@&"? Marty Orenyak Date zpo"Ycpl~ Janczyic Date Empi. Economics -I) e STBADLING, YOCCA, CARLSON & RAUTH FRITZ R. STRADLING NICK E. YOCCA WILLIAM R. RAUTH III C. CRAIQ CARLSON K. C. SCHAAF RICHARD C. GOODMAN JOHN J. MURPHY BEN A. FRYDMAN THOMAS P. CLARK, JR. PAUL L. GALE DAVID R. MCEWEN M. D. TALBOT RUDOLPH C. SHEPARD BRUCE C. STUART DOUGLAS F. HIGWAM E. KURT YEAQER ROEERT J. WH~LEN DAEYL H. CARLSON RAN~LL J. SHERMAN BARNEY A. ALLISON BRUCE FEUCHTER LAWRENCE D. FRENZEL PEGI A, GROUNDWATER NANCY RADER WHITEHEAD LEWIS G. FELDMAN C~RISTOPYXE~ J. KILPAT~ICH A PROFESSIONAL CORPORATION ATTORNEYS AT LAW SUITE 800, UNION BANK BUILDING 610 NEWPORT CENTER DRIVE POST OFFICE BOX 7680 NEWPOBT BEACH, CALIFORNIA 92000-0680 TELEPHONE (714) 640-7035 JOHN E. BRECKENEIDGE OF COUNSEL September 27, 1983 Aletha L. Rautenkranz City Clerk City of Carlsbad 1200 Elm Avenue Carlsbad, California 92008 Re: City of Carlsbad, California, Single Family Resi- dential Mortgage Revenue Bonds, Issue of 1983 Dear Ms. Rautenkranz: In connection with the City's issuance of the above- referenced bonds, I have enclosed herewith a copy of our legal copy should be maintained in your office. Following the issuance of the bonds, I will transmit a copy of all of the documents relating thereto. Thank you very much for your courtesy and cooperation. approving opinion which has been printed on the bonds. This Very truly yours, ,X' J JM : pw Enclosure cc: Mr. Martin Orenyak Vincent Biondo, Esq. a 0 FRITZ R. STRADLINO NICK E. Yocca C. Caaro CARLSON WILLI~M R. RAUTH m K. C. SCEAAF RICHARD C. GOODXUAN JOHN J. MURPHY BEN A. FRYDXAN THOMAS P. c-8, JR( DAVID R. McEwgw PAUL L. GALE RUDOLPH C. SHEPARD M. D. TALBOT BRUCE C. STUART E, KURT YEAOER Dowous F. HIOHAX DAEYL E. CARLSON ROBERT J. WEUEN RAIUMLL J. SIZERUN BRUCE FEUCETER ~WRENCE D. FRENZEL Psor A. GROUNDWATER Nawey R~DER WHITE~EAD LEWIS G. FELDMW -BY h ALLISON CHEISTOPRER J. KILPATEICX STBADLING. Yocca, CABLSON & RAUTH A PROFESSIONAL CORPORATION ATTORNEYS AT LAW SUITE 800, UNION BANK BUILDING 610 NEWPORT CENTER DRIVE JOHN E. BRECKEUKE~~K~E POST OFFICE 8OX 7680 OF COUNSEL NEWPOBT BEACH, CALIFORNIA 0526€l0-0680 TELEPHONE (714) 640-7035 October 5, 1983 Honorable City Council City of Carlsbad 1200 Elm Avenue CarlSbad, California 92008 Re: City of CarlSbad, California, Single Family Residential Mortgage Revenue Bonds, Issue of 1983 Dear Councilmembers: We have examined the Constitution and laws of the State of California, a certified record of the proceedings submitted to us relative to the authorization and issuance of the City of Carlsbad, California, Single Family Residential Mortgage Revenue Bonds, Issue of 1983, in the principal amount of $2O,OOO,OOO (the "Bonds"), and such other information and documents as we consider necessary to render this opinion. The Bonds have been issued pursuant to Part 5 of Division 31 of the Health and Safety Code of the State of California, as amended (the "Act"), Resolution No. 7259 of the City, and an indenture dated as of September 1, 1983 (the "Indenture") by and between the City of Carlsbad (the '*City") and Security Pacific National Bank, as trustee (the "Trustee"). The Bonds are issued in the form of fully registered bonds without coupons, are dated as of September 1, 1983, bear for therein) at the rate of ten percent (10%) per year payable on March 1 and September 1 of each year commencing March 1, 1984, mature on September 1, 2017, are of denominations of $58000 or any integral multiple thereof and may be transferred and exchanged, all as provided in the Indenture. interest from said date (or such later date as may be provided 0 0 Honorable City Council City of Carlsbad October 5, 1983 Page 2 The Bonds are subject to redemption prior to their stated maturity, at the times, upon the terms, and subject to the conditions set forth in the Bonds and in the Indenture. Principal of and interest on the Bonds are payable in lawful money of the United States of America which at the time private debts. Principal of the Bonds is payable at the principal corporate trust office of the Trustee in Los Angeles, California, and interest on each Bond is payable by check mailed to the person in whose name such Bond (or one or more predecessor Bonds) is registered at the close of business on the fifteenth day of the month preceding an interest payment date (subject to certain exceptions set forth in the Indenture). of payment is legal tender for the payment of public and The Bonds are special obligations of the City payable solely from and secured, to the extent provided in the Indenture, by a pledge of the loans, the revenues, insurance proceeds and all funds and accounts held by the Trustee (except as otherwise specifically provided therein), all as defined and provided in the Indenture. The Bonds are not a debt nor a pledge of the faith and credit of the City of CarlSbad, the State of California, or any other political subdivision thereof. The Indenture and the rights and obligations of the City, the registered owners of the Bonds and the Trustee may be modified and amended in the manner and subject to the conditions set forth in the Indenture. We are of the opinion: (i) that the Bonds have been duly and validly authorized and issued and constitute legally binding special obligations of the City; and (ii) that the Indenture has been duly and legally authorized, executed and delivered, and is a valid, legal and binding obligation of the City and creates a valid pledge of that which it purports to pledge, subject to the provisions of the Indenture. We are further of the opinion that, under existing statutes, regulations, rulings and judicial decisions, interest on the Bonds is exempt from present federal income taxes and from present State of California personal income taxes. We are also of the opinion that, in order for interest on the Bonds to be exempt from federal income taxes from the date hereof, Section 103A of the Internal Revenue Code of 19548 as amended, requires that the City meet certain requirements on a continuing basis. The City has covenanted in the Indenture to A e e Honorable City Council October 58 1983 Page 3 City of Carlsbad comply with these requirements. We are further of the opinion that, assuming at least ninety-five percent (95%) of the proceeds of the Bonds used to purchase loans is devoted to loans which meet the requirements of said Section 103A at the time such loans are executed, and assuming further that the City complies wick ~CS mvenants contained in the Zndenture, interest on the Bonds will continue to be exempt from federal income taxes under existing statutes, regulations, rulings and judicial decisions. With respect to the opinions expressed herein, the rights and obligations under the Bonds, the Indenture, and the loans are subject to bankruptcy, insolvency and other laws affecting the enforcement of creditors' rights in general, and to the application of equitable principles if equitable remedies are sought. Respectfully Submitted, STRADLING, YOCCA, CARLSON & RAUTH 5731P/2062/06