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:
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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.
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2- Resolution # -72 1'7accepting proposal of Empi re Economics to perform an Economic Feasibility Study for the Yortgage Revenue Bond Program.
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1 , 0 0 Exhibit I
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BLYTH EASTMAN PAINE WEBBER
INCORPORATED
555 CALIFORNIA STREET
SAX FRANCISCO, CALIFORNIA 94104 -
415-368-8000
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May 2, 1983
u.. %rty brenyalc
Director
Building and Planning
City of Carlsbad
CarXsbad, CA 92008
1200 Elm Avenue
M4Y 3 .7383
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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
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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
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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
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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
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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
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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
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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
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27 I 28 1
AYES: Council I'43bers Casler, Lewis, Kulchin, and Prescott
NOES : None
ABSENT: Council Member Chick
ATTEST :
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MARY H. ASLER, Kayor
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April 1, 1983 .. *. .
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Mr. Marty Orenyak . City of Carlsbad
1200 Elm Avenue
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. 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:
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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. ..'
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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
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. ' * ' 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.
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Mr. Marty Orenyak April 1, I983
Page Three
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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 $130,000. The computations by Empire Economics we:re based upon a comprehensive sample of some 6,000 sales in the SMSA, ' as compared to the Safe Harbor's sample.,,o,f. ,. less than 500 sales.
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j . :. -.$ Research' - Performed I b:y I -. a professional'
..f .$. '? The President of Empire Economics, 'Joseph Janczyk, holds a Ph.D. in economics with specializations,'in regional economics and forecasting, and is also an economics professor at California State College, San Bernardino. Although hei is backed by a highly trained staff that- provides support~..in terms of compiling data and clerical assistance, every study is actually researched and written by Dr. Janczyk. Due to this unique situation, ydur project is provided with the highest"'leve1, of professional
research possible. i .: -2 ,II
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Performance Schedule.' ,;
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The research for the Mark-et Demand Study is .,expkcted to commence
on or about April 15, 1983 and be completed no later than four
weeks thereafter- Progress reports will be provided upon request, if so desired. This time schedule takes into
consideration the other mortgage revenue bond programs that we are presently involved in. Consequently, we will be able to devote our full attention and efforts to Carlsbad's mortgage 'revenue bond program.
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Mr. Marty Orenyak April 1, 1983 Page Four -
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,. I F:rianc?al Cons!deraC!ons ,
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The.fees for the Market Demand, Income, and Average Area Purchase Price Studies, along with the payment schedule, are as follows:
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, . .. . .:$ : rrotal I..;.d;lij%;**._I;. I.. ' . , 'I *.I .,..., -*< Final
Study $ &-Fee ,I., '_ : :f 1 Retainer Payment :,.'." L . . ,~. ..' ~ ,. ' i:
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your Mortgage Revenue Bond Issue q -..d*.-,...I ;. ._, *.-.'. .%' : :.ii .I . ~,. . ., . . .. .
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APPROVEL;: APPROVED :
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Marty Orenyak Date zpo"Ycpl~ Janczyic Date Empi. Economics
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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.
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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
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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