HomeMy WebLinkAbout1986-04-15; City Council; 8369-4; 2075 Las Palmas Dr. lease approval-..
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P\ Ot' ,- ClTQliOF CARLSBAD - AGEN-BILL
AB#- TITLE: APPROVAL OF LEASE OF BUILDING AT DEPT. HD..
MTG. 04/15/86 2075 LAS PALMAS DRIVE CITY ATTY
DEPT. CM CITY MGR.
RECOMMENDED ACTION:
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By motion, adopt Resolution No. K93 approving Leas
Agreement with Palomar Airport Business Park to house th
Building, Planning, and Engineering departments.
ITEM EXPLANATION:
The attached lease agreement has been negotiated with Paloma
Airport Business Park for the lease of the building at 2075 La Palmas Drive. The building is expected to be ready for occupanc
in August. The rent for the building will start upon approval a
the tenant improvements as accepted by the City Manager.
The City will have an option to purchase the building for tw years from the date of acceptance. If the building is purchase
within the first year the cost will be a base price of $1,350,00
plus the cost of unamortized tenant improvements. The base pric
will increase to $1,460,000 during the second year. The leas
also provides the City with a repurchase option requiring th
Leasor to repurchase the building under certain conditions.
PURCHASE QPTION:
If the City Council were to decide to exercise its purchas
option, it is recommended that the purchase be accomplish€
through a lease purchase process using Certificates c
Participation. This process is relatively simple and tt
Certificates of Participation are easily marketable.
If the Council decides to exercise the purchase option, it i
recommended the purchase occur during the first year of tt
lease. The purchase price during the first year of the lease i
estimated at $1.6 million. The City's annual debt service woul
be approximately $300,000 per year. Through the use c
Certificates of Participation, and due to the fact that fees ar
not tax funds would be used to purchase the building, a vote c
the people would not be legally required.
It is recommended that the City Council delay making a decisic
to purchase the building until the on-going architectural stuc
of the existing City Hall site is completed. A decision to bc
the building should not be made until the Council determines tt
ultimate location and a construction time-table for permaner
City Hall facilities.
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Page 2 of the Agenda Bill No. 33&?-e7.
FISCAL IMPACT:
$939,456 over a four year period, If the Council decided t The annual lease costs for the building will be $234,864 o
purchase the building, annual costs would be $300,000 per yea
for a total cost, including financing over a ten year period, o
approximately $3,000,000.
Funds for the lease or purchase of the building will come fro
fee revenues and enterprise funds. First year lease payments ar
included in the proposed 1986-87 fiscal year budget.
EXHIBITS:
1, Resolution No. r5% 3 approving lease agreement.
2. Memo from Finance Director dated 03/26/86.
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RESOLUTION NO. 8503
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD, CALIFORNIA, APPROVING A LEASE AGREEMENT
WITH PALOMAR AIRPORT BUSINESS PARK FOR THE BUILDING
LOCATED AT 2075 LAS PALMAS DRIVE, CARLSBAD, CALIFDRNIA
WHEREAS, the City Council of the City of Carlsbad
California has determined the need to provide additional officl
space to house certain City departments; and
WHEREAS, after soliciting and reviewing proposals fo
office space, the City Council has decided to enter into
lease for office space with Palomar Airport Business Park;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the
City of Carlsbad, California, as follows:
1. That the above recitations are true and correct.
2. That the Lease Agreement between the City of Carlsba
and Palomar Airport Business Park attached hereto as Exhibit
is hereby approved.
3. That the Mayor is hereby authorized and directed t
sign the lease on behalf of the City.
PASSED, APPROVED AND ADOPTED at a regular meeting of the
Carlsbad City Council held on the 15th day of April 9
1986 by the following vote, to wit:
AYES: Council Members Casler, Lewis, and Chick
NOES: None
ABSENT: Council Members Ku ch' and Pettip L uB.&
MARY H. dASLER, Mayor ATTEST:
ALETHA L. RAUTENKRANZ, City C rk
(SEAL)
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LEASE AGREEEN1
CITY OF CARLSBAD GOVERNMENT OFf ICES
THIS CEASE AGREEMENT, made and entered into this /p day of
, 1986, by and between PALOMAR AIRPORT BUSINESS PARK, *
hereinafter referred to as 'lLessor" and the CITY OF CARLSBAD, hereinafter
referred to as rrCityr', whereby the parties hereto agree as follows:
WITNESSETH:
1 . ADMINISTRATION. This Lease Agreement (hereinafter ref erred to as
"Lease'') shall be administered on behalf of City by the City Manager, City of
Carlsbad, hereinafter referred to as "City's Lease Administrator", and on behalf
of Lessor by Bernard W. Gilmore, Vice President.
2. DESCRIPTION.. Lessor hereby leases to City that real property
consisting of Building #44 of approximately 22,627 square feet of office space
known as 2075 Las Palmas Drive, Carlsbad, California, 92008, described as Lot 5
of Parcel Map 10061, as delineated on Exhibit "A", attached hereto and by this
reference made a part hereof. Said real property (hereinafter referred to as
"Demised Premises") is leased on a modified gross basis in accordance with the
tens and conditions hereinafter set forth .
3. TERM. This Lease Agreement is effective on the date first above -
written.
the Demised Premises by City.
acceptance issued by the City to the Lessor,
terminate 48 months from the date of acceptance.
The term of this Lease shall commence upon the date of acceptance of
Said date shall be as specified in the letter of
The term of this Lease shall
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The date of acceptance of the Demised Premises by City's Lease Administrator
whose acceptance shall not be unreasonably withheld, shall follow notice to City
from Lessor that the Demised Premises are approved for occupancy by the City of
Carlsbad, Building Department.
Provided, however, if Lessor cannot deliver said facility in completed
condition ready for occupancy within 120 days from the date of execution hereof
by City, City may terminate this Lease at City's option without any liability to
Lessor.
including but not limited to acts of God, strikes or natural disaster, (but not
including financial inability, or acts or omissions of Lessor's agents or
contractors), shall not be included in said 120 day period.
Delays caused by events over Hhich Lessor shall have no control,
City shall have the option to extend this Lease upon expiration thereof for
additional one (1) year periods up to a total of six (6) years upon the same
terms and conditions as stated herein. The option may be executed by City by
giving written notice of exercise to Lessor at least sixty (60) days in advance
of the normal expiration of this Lease or any succeeding extension thereof.
4. EARLY TERMINATION. This Lease may be terminated by City at its sole
option at any time after twelve (12) months from date of acceptance by first
giving to Lessor no less than sixty (60) days prior written notice.
event this Lease is terminated early by City, then City shall reimburse Lessor
the sum equivalent to one-third (1/3) of the remaining monthly rent payments as
described in Section 6 of this agreement including any unamortized costs of
tenant improvements.
In the
5. HOLDING OVER. Any holding over by City after the expiration of the
term of this Lease shall be construed to be a tenancy from month to month at the
monthly rental and on the terms and conditions specified herein so far as the
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same may be applicable.
City to remove its equipment and fixtures.
Such holding over shall include any time required by
6. RENT. The base rent reserved for the first four (4) years of the term -
of this Lease shall be the sum of Nineteen Thousand Five Hundred Seventy-Two
Dollars ($19,572.00) per month.
day of the month following the month in which rental was earned during the term.
Rent shall be payable in arrears on the first
If the first day of the ten shall not be the first day of the month, the
rental for the portion of the term occurring in the first and last calendar
months of the term shall be appropriately prorated.
commence upon the date of acceptance of the Demised Premises by City.
Accrual of rent shall
Instdlments of rent shall be paid by depositing City warrants in facilities
of United States Postal Service addressed to the office of Lessor as stated in
the llNOTICE1' clause below.
7. TENANT IMPROVEMENTS. Lessor shall furnish to the City detailed plans
' and specifications of desired tenant improvements within thirty (30) days of
execution of this agreement.
bids from qualified independent contractors (hereinafter referred to as
"Contractor") to accomplish the tenant improvements in accordance with the
approved plans and specifications. City reserves the right to review, add,
Lessor shall secure a minimum of three (3) written
delete, modify, and otherwise approve the submitted bids prior to Less~or
beginning the installation of the tenant improvements. City warrants that
approval will not be unreasondly withheld.
Lessor shall direct installation of the tenant improvements dilligently, in
a professional manner, and in accordance with approved plans and specifications.
Lessor shall deliver the demised premises in completed condition ready for
occupancy within ninety (90) days from the date of receipt of City's plans and
specifications for tenant improvements.
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8. PAYMENT FOR TENANT IMPROVEMENTS. Lessor agrees to construct tenant
improvements required by the City for the use of the leased premises. A tenant
improvement allowance of $15.00 per square foot is included in the base rent as
described by Section 6 of this agreement. Following installation of the tenant
improvements, the base rent payable monthly by City to Lessor shall be adjusted
at the rate of $0.0263 per square foot per month of leased premises for each
dollar greater than or less than the aforementioned $15.00 per square foot
credit.
The final cost of tenant improvements following installation shall be
limited to the sum equivalent to the total amount of payments to the tenant
improvements contractor including all progress payments and retentions. City
shall not be responsible for Lessor's incidental expenses including but not
limited to legal fees, bonding and insurance requirements, contract
administration, travel and per-diem expenses, and other related costs.
9. COST OF LIVING AD3USTMENT. Should City elect to exercise the option to
extend this Lease as described in Section 3 of this agreement, the monthly base
rent provided for in Section 6 of this agreement shall be adjusted to reflect
any increase or decrease in the purchasing power of the dollar. Beginning with
the first month and ending with the twelfth month for each one (1) year
extension of this Lease, the adjustment in the base rent shall be the average
monthly consumer price index as herein defined for the first full calendar
quarter immediately preceding the commencement of the term of this Lease in
comparison to the last full calendar quarter of this Lease or extension thereof.
The consumer price index which shall be used as the source for such index
numbers, shall be that published by the U.S. Department of Labor, Bureau of
Labor Statistics, "Consumer Price Index for all Urban Consumers", for the San
Diego Metropolitan Area (1967=100). In the event that indexes are not published
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for the San Diego area, then another comparable index or source of such
information generally recognized as authoritative shall be substituted by
agreement of the parties. If the parties should not agree, such source of
infomration shall be determined by arbitration pursuant to the provisions of the
California Code of Civil Procedure.
Notwithstanding the above cost of living formula, the adjustment for each
one (1 ) year extension of this Lease in no event shall be less than three (3)
percent nor more than five (5) percent in any twelve (12) month period.
10. PURCHASE OPTION.
title to the Demised Premises.
Demised Premises for the sum of One Million Three Hundred Fifty Thousand Dollars
($1,350,000.00) plus any unamortized costs of tenant improvements as described
in Section 8 of this agreement if the option is exercised during the first year
of this agreement. If the option is exercised during the second year of this
agreement, the purchase price shall be One Million Four Hundred Sixty Thousand
Dollars ($1,460,000.00).
City shall be free of all liens, encumbances, obligations, and restrictions of
any kind. Said option shall be open and available to City for a period of two
(2) years following the date of acceptance of the Demised Premises by City as
described in Section 3 of this agreement. Lessor agrees not to revoke or
otherwise alter the terms and conditions of this offer during the course of the
option period. City may exercise this option by notifying Lessor in writing at
any time prior to the expiration of the option.
Lessor warrants that it holds legal and equitable
Lessor offers an option to City to purchase the
Title to the Demised Premises offered by Lessor to
All incidental costs related to the purchase of the Demised Premises by City
during the option period including but not limited to escrow fees, brokerage
commissions, insurance fees, guarantees and other forms of security, and all
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other expenses related to the transaction shall be the sole responsibility of
the Lessor. This lease will terminate upon close of Sale except for Section 11
of this agreement.
11. RE-PURCHASE OPTION. Lessor offers an option to City to re-purchase the
Demised Premises for the sum of One Million Three Hundred Fifty Thousand Dollars
($1,350,000.00) if City elects to exercise its purchase option durint the first
year of this agreement as described in Section 10 of this agreement. Said re-
purchase option shall be open and available to City for a period of four (4)
years following the close of escrow of City's purchase of the Demised Premises
from Lessor. Lessor agrees not to revoke or otherwise alter the tens and
conditions of this offer during the course of the option period. City may
exercise this repurchase option by giving Lessor notice in writing as
hereinafter provided at anytime prior to the expiration of the option.
The City shall give Lessor one hundred eighty (180) days notice of the
City's intention to exercise the option to have the Lessor repurchase the
Demised Premises.
and Lessor agree to jointly market the Demised Premises through a third party
During the one hundred eighty (180) day notice period, City
jointly selected by City and Lessor. If during this notice period, the Demised
Premises is sold for a sum greater than One Million Three Hundred Fifty Thousand
Dollars ($1,350,000.00) the City and Lessor shall divide equally any sales
proceeds, less marketing and related incidental closing costs, in excess of One
Million Three Hundred Fifty Thousand Oollars ($1,350,000.00).
All incidental costs related to the repurchase of the Demised Premises by
lessor during the option period including but not limited to escrow fees,
brokerage commissions, insurance fees, guarantees and other forms of security,
and all other expenses related to the transaction shall be the sole
responsibility of the City -
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12. DEVELOPMENT OF PARKING FACILITIES WITHIN UTILITY EASEMENT. A utility
easement exists across the southern portion of the property occupied by the
Demised Premises as indicated in attached Exhibit "A".
City to develop additional tenant parking facilities within and around said
utility easement. It is understood by the parties to this agreement that ail
costs related to the development of the aforementioned tenant parking facilities
shall be the sole responsibility of City.
Lessor agrees to allow
13. USE. The Demised Premises shall be used for office space for City's -
Community Development Department, but City reserves the right to use the Demised
Premises for any permitted use.
14. UTILITIES. City shall pay for all utilities necessary for the use and
enjoyment by City of the Demised Premjses, except water and sewer, which shall
be paid for by Lessor.
15. 3ANITORIAL SERVICES AND TRASH REMOVAL. City shall furnish at its sole
expense all janitorial and trash removal services which may be requried by its
occupancy and use of the Demised Premises. Such services shall be provided at
the level necessary to maintain the Demised Premises in a clean and orderly
condition.
16. REPAIRS TO MAINTENANCE. Subject to the provisions of the DAMAGE OR
DESTRUCTION clause hereof, and except for damage caused by any negligent or
intentional act or omission of City, its agents, employees, or invitees, Lessor,
at Lessor's expense, shall keep the entire interior and exterior of the Demised
Premises in good order, in a clean, healthful and wholesome cordition ad
repair, including any required eradication of pests and trash removal related to
exterior building and landscape maintenance. Lessor shall make repairs required
under this clause within a reasonable time after receipt of written notice of
the need for such repairs. City agrees by taking possession of the Demised
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Premises as herein set forth that such Demised Premises are then in a tenatable
and good condition and that City will take good care of the Demised Premises and
the same will not be altered, repaired or changed without the written consent of
Lessor b
17. NONPERFORMANCE OF SERVICES BY LESSOR. If Lessor fails to provide
satisfactory repair and/or maintenance services to the Demised Premises as
hereinabove set forth, City may notify Lessor in writing; and if Lessor does not
instigate measures to provide satisfactory service and to remedy the
unsatisfactory conditions within five (5) working days after such notice has
been mailed or delivered by City, City may provide the utilities, trash removal,
landscape maintenance? repair andlor maintenance services necessary to remedy
the unsatisfactory condition and assure satisfactory service, or have others do
so, and abate an mount equal to the cost thereof fran the rent thereafter
payable.
18. BUILDING AND SAFETY REQUIREMENTS. During the full ten of this Lease,
Lessor agrees to maintain the Demised Premises in compliance with all applicable
building codes, statutes, and orders as they are applicable on the date of this
Lease, and as they may be subsequently amended.
Lessor further agrees to maintain the Demised Premises as a "safe place of
employment"j as the term is used in the California Occupational Safety and
Health Act, where the provisions of such Acts are applicable on the date of this
Lease.
G of the Uniform Fire Code (1976) shall be the responsibility of Lessor.
Test procedures for fire extinguishing systems as set forth in Appendix
In the event Lessor neglects, fails or refuses to maintain said Demised
Premises as aforesaid, City may, notwithstanding any other termination
provisions contained herein :
A. Terminate this Lease; or
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B. At City's sole option, cure any such default by performance of any
act, including payment of money, and subtract the cost thereof plus reasonable
administrative costs from the rent ,
Conditions caused solely by City and not subject to the control of Lessor
are excluded from this provision.
19. INSTALLATION AND ALTERATION. City may install any and all fixtures or
improvements necessary or desirable for City's use of the Demised Premises for
the above described purposes but shall make no permanent alterations in, or
additions to, said Demised Premises without the written consent of Lessor, which
consent shall not be unreasonably withheld.
installed by City shall remain the property of City and at the option of City
may be removed at or before termination of this Lease or extention thereof or
may be abandoned to Lessor and any damage to the Demised Premises occasioned by
such removal shall be repaired by City upon request by Lessor within thirty (30)
days of the termination of this Lease or any extension thereof,
expiration of this Lease or the sooner termination thereof as herein provided,
except in the event Of destruction of the property as provided for in the DAMAGE
OR DESTRUCTION clause hereof, City shall deliver possession of the Demised
Premises to Lessor in the same condition it enjoyed at the beginning of this
Lease, or as altered, ordinary wear and tear and damage by the elements
excepted.
Such fixtures or equipment
Upon the
20. DAMAGE OR DESTRUCTION. In the event that the Demised Premises should
be partially damaged by fire or any other cause during the ten of this Lease or
extension thereof, other than through the fault or negligence of City, repairs
shall be made by Lessor, at its sole expense, and with all reasonable dispatch,
and City shall be allowed a reduction of rent in proportion to the ratio of the
damaged area to the entire Demised Premises. Such reduction of rent shall
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continue during the time required for Lessor to make such repairs. If, in the
opinion of City's Lease Administrator, City can use and occupy the Demised
Premises without substantial inconvenience, there shall be no reduction of rent.
In the event the damage amounts to the substantial destruction of the Demised
Premises or cannot be repaired in ninety (90) days, this Lease may be terminated
by either party at its option by giving written notice of intention to the other
party within thirty (30) days following said destruction; if this Lease is not
so terminated, City shall not be liable for any rent until repairs and
reconstruction have been made by Lessor, subject-to the approval of City's Lease
Administrator, so that the Demised Premises are again ready for occupancy.
21. SIGNS. City may erect any signs necessary to identify City's occupancy
of the Demised Premises during the term hereunder subject to approval of Lessor.
Signs shall be removed by City upon termination of this Lease after receipt by
City of a written request by Lessor.
removal of signs within thirty (30) days of termination of this Lease, City
shall be under no obligation to remove said signs.
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In the event Lessor does not request
22. QUIET POSSESSION. Lessor for itself, its heirs, devises, successors or _u__
. assigns, convenants and agrees that City, upon payment of the rental reserved
and the compliance with all the terms and conditions of this Lease may lawfully,
peacefully and quietly have, hold, use, occupy and enjoy the Demised Premises
and each part thereof during the term of this Lease or any extensions thereof
without hindrance or interruption from Lessor, its heirs, devises, successors or
assigns. Lessor has and reserves the right at any reasonable time to enter upon
the Premises to inspect said Demised Premises or to perform any of the
obligations imposed by this Lease, but in so entering shall conduct itself so as
to minimally interfere with City's use and enjoyment of the Demised Premises.
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23. NOTICE. Any notice or notices given by Lessor or City to the other may -
be personnaly served upon Lessor or City or any person hereafter authorized in
writing to receive such notice, or may be served by depositing the same in the
United States Mail, postage prepaid, addressed to the appropriate address
hereinafter set forth or to such oither address as Lessor or City may hereafter
designate by written notice.
TO: - CITY TO: - LESSOR
City of Carlsbad
City Manager 1120 Sycamore Avenue 1200 Elm Avenue Suite A
Carlsbad, CA 92008 Vista, CA 92083
Palmar Airport Ehsiness Park
24. INSURANCE. Lessor shall maintain throughout the term of this Lease
fire insurance and extended coverage on the Demised Premises to the extent of
90% of replacement value of improvements located on the Demised Premises.
Included in the policy or policies of insurance shall be a standard waiver of
rights of subrogation against City by the insurance company issuing said policy
or policies.
25. EMINENT DOMAIN. If any part of the Demised Premises shall be taken or
condemned for a public or quasi-public use and a part thereof remains which in
the opnion of the City's Lease Administrator, is adequate to permit City to
continue the uses stated in the USE clause above, this Lease shall, as to the
part os taken, terminate as of the date legal possession shall be taken by the
condemnor, and the rent payable hereunder shall be adjusted so that City shall
be required to pay for the remainder of the ten only such portion of such rent
as the value to City of the part remaining after the condemtion bears to the
value of the entire Demised Premises at the date of condemnation.
condemnation takes all the Demised Premises, or such part thereof that there
does not, in the opinion of City's Lease Administrator, remain a portion
If such
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adequate for City's use hereunder, this Lease shall thereupon terminate.
part or all of the Demised Premises is taken or condemned, the compensation
awarded upon such condemnation or taking shall go to Lessor or City as their
respective interests may appear.
SEVERABILITY.
If a
26. The invalidity of any portion of this Lease as
determined by a court of competent jurisdiction shall in no way affect the
validity of any other provision hereof.
27. TIME OF ESSENCE. Time is expressly declared to be of the essenae of
this Lease and of each, every and all of the covenants and conditions herein.
If the parties hereto should not agree as to the terms
and provisions of this Lease, such disagreement shall be determined by
arbitration pursuant to the provisions of the California Code of Civil
Procedure.
29.
28. ARBITRATION.
ENTIRE AGREEMENT. This Lease contains the entire agreement between the
parties hereto and no term or provision hereto may be charged, waived,
discharged or terminated lnless the same be in writing executed by both parties
hereto .
IN WITNESS WHEREOF, we have hereunto set our hands and seals.
CITY OF CARLSBAD @, I--=&, JL, .csLlj,,.4 ' .., i 5 , i- i,,, L L By: /". , t,L & t,c " I/- c , L;,i32. ~
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APPROVED AS TO F : / ATTEST:
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MARCH 26, 1986
TO: ASSISTANT CITY MANAGER - MANNEN
FROM: Finance Director
LEASE-PURCHASE OF ENGINEERING/PLANNING/BUILDING OFFICE SPACE
I have received two of three proposals from leasing companies who have an
interest in assisting the City in financing the Palomar Oaks office building.
The third company Municipal Leasing Associates , Inc. has not prepared
Markets Group and First Continental Financial Corporation are based on
privately placed certificates of participation. This is a relatively simple
type of issue that depends heavily on the City's ability to provide a stream
of income which can be pledged to pay the debt service costs. are sold unrated and uninsured due to the ability of the underwriter to
easily place issues of this type.
Page 2 of the Security Pacific letter has a sample schedule showing the
size of the debt issue necessary to provide $1,640,000 for the purchase
of the building. An issue of about $2.1 million provides the necessary
acquisition funds as well as funding of the issuance costs of about $89 , 000.
On a ten year issue in the present debt market (see page 3 of the Security
Pacific letter) we could expect an issue with net interest costs of 7.036%
with an underwriter's discount of about 3%. The City's annual debt service
payment would be about $298,000 per year. Total debt service payments
over the 10 year life of the issue would be $2.4 million.
letter also outlines a 12 year issue on pages '7 through 11.
The important aspects of this proposal are :
a written proposal, The deals outlined by both Security Pacific Capital
These issues
The Security Pacific
1. The concept of using certificates of participation for the
acquisition of this building is sound and readily accepted by
the market.
The City must commit about $300,000 per year for 10 years
(or $260,000 per year for 12 years) to finance this acquisition.
Sources of funds for the debt service payments would be first, development fees (Engineering, Building , Planning) , second, general fund revenues and/or third, public facilities fees.
2.
3.
If structured properly, the certificates could include a call provision which
would protect the City in the event that interest rates on earnings decline
below the rate of the remaining debt.
issue.
These call provisions can increase
the net interest cost of an issue if the first call can be made early in the
e e
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I recommend that we brief the City Council on the use of certificates of participation prior to the drafting of a ballot measure asking for voter appro
of this acquisition. Several "experts" are available to us ranging from financi
advisors to bond counsels for such a presentation. fees associated with this project which can be borne by either the Developme There may be some
departments or by Finance.
I will be available to meet with you at your convenience to discuss this project.
attachment: Letters from Security Pacific Capital Markets Group, and First Continental Financial Corporation
c: Ray Patchett
a e
Security Pacific Capital Markets Group
300 South Grand Avenue, 8-211 21st Floor
Los Angeles, California 90071
March 17, 1986
Mr. James F. Elliott Finance Director
City of Carl sbad 1200 Elm Avenue Carl sbad, Cal i forni a 92008-1 989
Dear Jim:
I am going to be on vacation the week of the seventeenth, but I wanted you to have this information for your reference. The cases we ran were for 10 and 12 years, and you can see the net amount of funds required. Both isSue Sizes are approximately $2.1 million, the anticipated Net Debt Service is approximately $2.4 million and the underlying cost of funds as a result is less than 7% on the $1,659,000 that you required.
These figures are based on current interest rates, and I have assumed a privately placed issue. The costs of issuance are relatively low, and would probably be $10,000 to $15,000 higher for a rated issue. Based on that savings alone, I would recommend sticking with the non-rated or privately placed issue. We have assumed for these purposes that the phones would be available May lst, but as you can see from the schedule of draws they would not be used until July 1. Any draw later than that would result in additional arbitrage earnings to the City.
This is not intended to present any pressure but you should be aware that the proposed delays in the effective date of the tax law changes would make such a funding quite feasible today, and enable you to realize the arbitrage earnings on these funds until they are actually expended. The net impact of this over the next three to six months should be in the neighborhood of $20,000 to $30,000. This is not a huge amount, but certainly not something to be totally ignored, therefore you may want to consider some exceleration in the program.
If you have any other questions, I will be available the week of the 24th, and I will be checking in for messages, et cetera. Please feel free to contact me at (213) 229-1423.
Si ncerel y , lo!&: 25. $J/d 37--
William E. Straw Vice President
: ake
Enclosures
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@I d BANK
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CITY OF CRRLSBRD
CERTIFICRTES DF CCIRTICIPCIXitd
TEN YEGR ISSUE
SOURCES AND USE5 OF FUNDS
DSLS”V’RY DKE: 5f !/a6
SOURCES
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............................................ ............................................. F.
............................................ ............................................
4F
------- ------- 6
c PRR RWUN: Uc Fi)ti.I)S.. ................. $2,855.0@. 80
+PRMIUI I-OISCUUNT.. ................. $8.00
BOND PROCEEDS. .......................................... 2. efi, aaa. BB
$2. BE, 000. e0
----I_--_ c
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USES OF FUNS 0 --------_--- -----------
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UXDERWRITERS DISCUUNT (X o? $). ......... t 3.k3im3im).,. 62,550. e8
XST OF ISSURNCE.. ...................................... 25, a@$. e0
CAPlTRLIZED INTEREST.. .................................. 57, ma. 19
DEBT SERVICE RESERVE.. 299,e62.5a
NET CUNSTRUCTIUN FUND FWJNT.. .......................... 1,648,884. €7
P, ..................................
CONTINGENCY. 1.Z72.64 ............................................ f
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$2, amm. e~ ?L
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CITY OF CARLSSFID CEqT IF1 WTES OF PRRTICIPRTIDN
TEN YEilR ISSUE
DEET SERVICE SCMDULE
DELIVEW DATE: 51 1/86
-____--_-__-____-_-__ ---------------_-----
-_-_------I---_---- -------------_------
DClTi PFiINCiPR: COUPON INTEREST PEFLIED TOT& F!S&RL TOTRL -------- -------------- ---------- -.m------------ -------------- ___--________
i:/ :/a6 7&986,73 7u3,386,75
51 :is i55.een.m 5.750000 70.388.75 225,988.75 296.977.50
!L/ 1/87 66.532.50 66.532.50
5' i!Bb 165, BOO.OO 6. 850000 66,532.50 231.532.50 238.065. #
1!/ 1/86 61,541.25 61,541.25
5/ 1/61 175,080. 0B 6.3088BcS 61,541.25 236* 541.25 298,082.33
!I/ !/a5 56.028.75 56, W8.75
5! 1/90 m,m0.t~ 6.5me0 56. @2&. 75 241.028.75 247,057.58
I!/ i/98 44,970. 00 49,370.~
51 :I31 135. 088.@% 6.8B@0@8 49,370. ee 244,378. ea 294.940. e~
51 i/3? 218.@8@.00 6.350800 43,340. 00 253,340. 00 e96,6m. 0a
51 1/33 225. 000.00 7.05088'2 36,042.5~ 261.042.5~1 297,085,~a
111 1/91 43,340.80 43.34%. 00
I!/ 1/32 36, 042. 56 36.042.50
lli 1/53 24, Iil,25 28,11!.2f
5i iJ94 248,801.88 7.153000 20.1 : 1.25 260,111.25 296.222. s
ll{ 1/94 13,53!.25 i9.531.25
!l/ 1/95 ia.186.2~ 10,106.25
v 1/35 260,e08. 0e 7.250008 13,531.25 273,531.25 233,06?.5@
51 1/96 275,m0.00 7.350a00 10, !%. 25 285,1@6.25 23% 22.58 ---------- -------- -_-------I
2, a85.086. ea 884,385. m 2,m385.08
2.085.BiZ)Q. 00 884.385.0a 2,969,3~5. m RCCYUED
------------ _I___-_______ --I--------- --_---_-____ ---___--______ --_--------_--
WED 5/ 1/86 KH DELIVERY IF 51 !/a6
BDN5 YERRS 12,57&. aa
F;JE?QGE CUUPOt 7. 036
RVEWGE L!FE 6. @25
';IC % 7.635688 x USINS I00.0$@6880
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CITY OF CRRLSBAD
CERTIFICRTES DF PRRTICIPFITION
TEN YEAR ISSUE
NET DEBT SERVICE REQUIRMENTS
ELIlJERY DRTE: 5! 1/86
PERIOD TOTFIL CONSTR. FUND DEBT SK. RES. MET SUWLLIS FL"S
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--I------------------- -------------------------
-------_I---------------- ----------------------------
ENDlNG PRIMCIPR CULlPClM INTEREST DEET SERV!CE EFIRNIMGS t CRP. NT. DEE! SERVICE REBCI!NING
111 1/86 78,986.75 7a, 988.75 78,388.75 0.08
51 1 /a7 155,008. a0 5.75~00~ 70,968.75 225,506.75 11,962. 56 214,1&26. 95
!1/ 1/81 66,532.56 66,532.5@ 11, '362.50 54.516.08
51 i /ti6 i65,10. aa 6.0500aa 66,532.56 231.532.58 i i, 962.5a eis,m. 00
111 1/88 61,541.25 61,541.25 ii,%2.5a 49,578.75
!I1 1/69 5i. o2a. 75 56.028.15 11.362.5PI 44. B66. E
5/ 1/91 135,880. 88 6.800@88 49,470. 88 244,978.0B 1~9~12.50 233,867.58
iil iI91 43,348.08 43.340.~~ - 11,962. sa 31,377. 56
5/ 1/92 210,00a.e~ 6. 3mm 43,346.00 Z53.340. @PI 11,462.56 24!,3?7.50
11/ 1/92 36, 842. sa 36,052. sa 1 1,962.5a 24, am. a$
5/ 1/93 225,000.80 7.~5~ma 36,842.50 961, 842. 56 1 I, 962.58 249,880.0@
111 1/33 28,11!.25 28.111.25 l:, 362.58 16,146.75
------- -I--------- ----- ----I--- ------- ---------- --------- ------ ----_I
5/ iI83 175, 0@0.8# 6.388008 6r, 541.25 236.54i. 25 11,962.50 ir24,fr76. 75
51 1/90 l85,BB0.86 6.558008 56, Q28.75 24 1,826.75 !!,962.56 229,666.25
111 i/% 49,978. ea 49,370.0~ 11,362.58 38, @87.5@
51 1/94 240, ~BB. a8 7.15~000 28,111.25 260,111.25 1 L JE~. 50 256,148.75
51 1/35 268,000.00 7. 2mi1m i9,53!. 25 279,551.25 I 1,362. 58 267,568.75
111 1/94 19,531.25 13,531.25 11,%2. 50 7,568.75
!1f 1/95 ia, 106.25 18, 1&. 25 I!, 962.58 1.656.25
51 1 /96 2?5,0@8. 80 7.350@08 10,186.25 285,106.P5 31 1,825. B0 27.775. 88 -------------- -----I------- -------I--- ------------- ------------ --------------
2, BBf, MMO.O1 884, m. BB 2,969,385.0a 597,338.75 2,393,821.25 --_----__-__-- --____------_ -_--_----_-__- -----_-_-___- ----_-_------ ______________ ______________ ______________ ____-____-____ ---__-_------ -------------- ---______----_
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CITY OF CARLSBRI!
CERTIFIWTES 9F PRRTICIPRTIDN
TEN YERR ISSUE
LRPITRLIED INTEREST FEND
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---------------I---- ........................
--------------------__-- -----------------------
DELIVERY DFITE: 5! 1/86
PERIW BEGINNING flCCRL!UEb WNSTR. FJM 5EbT SERVICE CWITRLltED TUTRL FUNOS EEiQ INTEREST E!
* END1 N6 BRLRNCE INTEREST ERRHINGS RESERVE IN?. ERRNINE FIVAILRBLE CRPITQi!ZED BFli
t 8.N0008 %) ( 7.0000B0 %) ~100.0B8U0 %)
lli 1/86 57,@30,13 11,762,58 1,996.06 79,959.75 N9bR. 75
-------- -------------- -------------- ------------ ---------I-- ------------- -------------- ---------I- ---------.
-------I-- _____-_______ ----------- ----------_- -----__-___--_
1 1,962.50 1,996.86 70,966.75 ---------- ----------- -------------- ----------- -----I------ -------I-- ------------- ------------- -----------_- _--_-_____
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CERTIFIWTES OF PFIRTIC!PRTIUN
TEN YERR fSSE
CBVSTRUCTIDN FtJkD
OELlVERY DRTE: 5/ 1/86
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-------------I- ---_-----____--_ c ---_-----_-___--- -----------------
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DRRW CONSTRUCTf DN CDNSTRXTIDN NET CONSTR. INS, RRTE CUNS'f9. FUND DEBT SERVICE CAPITRLIZED RSMCIINING DRTE FUKB BBLRNCE DRRW NEEDED FUKB DRRU DF DRRW EFIRNINGS RESERVE INT. ERRNINES CO#STR. FUND! d I 8.0@@080 $1 i 7.0@0pI0 d)
----I ----------- -------- ----I--I ---__- ------I-- --------_- __--_____-_ ______I
7t !I& 1, €40,564.67 1,659,000.05 1,640,084.67 7.0&?@80 16,315.33 -0.8 ---------- _--I--__-__ ------------ --_______ __I____
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!,659.086.06 1,648,084.67 18.915.33 ----------- ----_------- _---_______ -----------I ------------_ _--_I____-_ ------------- __---_______ ------------ -----_-___I r
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CERT!FIUFITES DF ?FiRTICiPFiTltrf$
iW;LY; YERR ISSLE T -, IIP _---______--____-_----------------------------- ................................................
SOUgCCES RND USES OF FU,NDS ................................................ .................................................
DELIVEF~Y DGTE: 5/ 1/86
SOURCES ---____ -_-____
Xi5 G%N 2' FONDS.. ................. $E,058,6@@.$@ ................. iF'REl'I3 "-0:SCEJHT.. ea. BO
N?$ P?X=_TDS. .......................................... Z650.689. @6 ----------------
$2- 858, @@e. @6?
?'$; OF FifHES -_----------- __--__--_----
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ZN~ES~RITE~S DISWUkT !X cw $)... ....... ( 3.81ad88%!.. . &I* 588.80
5 L'F 1SSUL"E. ....................................... 25< eae. 80
C'RPITRLIZED ISTE4EST.. .................................. za,.333.42
Bib7 SERVICE SESERVE.. .................................. 26mB. BB
NET CDWSUCTIOtl FUND RMOUWT.. .......................... 1,648,684.67
CONT!NFENCY.. ........................................... 1, ??!. 3@
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CITY 6 F CRRLSBFII!
CE3T IF1 CRTES OF PRRT ICIFdTIOh!
TWELVE YERR ISSUE
DEBT SERVICE SCHEDF-E
DELIVERY DRTE: 51 !/a6
-----------------_- ------------------_- c
--------------------- -------------------__
4%
DRTE PRINCIPFI? CDJPON INTEREST PERIUD TOTFI? FISCAL TUTRi -------- -------------- -----_---- -----------__ _I-_--_-__ -____________ *
I!/ i!86 71,405.80 71,405. B0
a, 51 1/87 120,01maa 5.750000 71.4~00 191.405.M XWB.~P
11/ 1/87 67,955, a0 67,m.~0
5/ mi8 18, bee. @a 6. maaa 67,355. @a 192,955. @e x,e,3i8.@0
5/ i/~? 138.a6~~00 6.300a~ 64,173.75 194.173.75 za.347.33
5/ :/go 140, e00. ea E. 5m~8 &a, ex 75 2ae, 078. 75 %e, 157. sa
:I/ 1/9@ 55,493.75 55.493.75
51 Y~I m,me.m 6.~100~1~ 55,433.75 205,433.75 za,3~7.sa
!if 1/31 56,393.75 58.343.75
11/ 1/92 44,833.75 44,833.75 5/ :/95 178, ma. 60 7.e5~000 44,833.75 214,833.75 259.667. Sa
1!/ 1/33 28, 841.25 sa, 841. is
51 1134 15'i,B@L80 7.150@00 38,i341,25 223,841,25 ir62,682,58
11/ 1/94 32, E27.5B 32,227. 5a 5/ 1/95 1'35. Mfl. 80 7.2500Q0 32,227.58 227, ZZ7.50 259.455. I
llf 1/95 25, i5a. 75 z,,i5a. 75 5/ 1/96 m, mm. ea 7.35~00~ 25.m 75 235.158.75 260,317.50
11/ 1/88 64,173.75 64,173.75 ZT
I!/ 1/89 66,076.75 6& 676.75 6
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51 :/92 1h0,e@.B.e0 &.350@@@ 50,333.75 E:8,333.75 268.787.50 .E,
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lI/ l/% i7,441.25 17,441.25
!I/ 1/37 4, ~360. a8 9,86Q. 00
51 i.197 225,000.00 i.45am8 17.441.25 242,441.25 253.882.58
5; :m 240,tm.a0 7.55e8ee 9,060.08 243,866.08 258,120. BB
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----------_ --------- -I_-----__
~aa, ma. ea 1, Bi4.13. BB 3.124,25.88
E', 415e.00e. e0 1,874.1P5.88 3,194,125. BB
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RCCRUED
------------- -------------_ ------------- --__--_--__ -----__-----_ -- -_--- --- ---- e
DRTED 5/ i/86 WITH DELIVERY liF 5/ 1/66 hi POWD YERRS 14,910.m3
WAFIGE COUPON 7,264
WE4GE LIFE 7.273
+:I: % 7. ,364058 % USING 100. @0@00U L
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CITY OK CiIRLSBgD
CERTIFILRTCS OF PRRTICIPRTION
TWELVE YERR ISSUE
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--------------I.------------ II~.I...OIO.~~YUIU~~""~~~~~
p" NE? DEBT SLRVICE RtQUIREMEWTS
KLIVERY DATE: 5i 1/66
----------_---____------- -----__----_-------_--------
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PER I OD TOTClL COMSTR. FUND BT SVC. RES. NET SURPL!!S FUN
ENI! 1 N6 PRINCIPRL CDiPON INTEREST DEE SERVICE ERR?IlffiS t CRF. INT. DEBT StRVICE REblfiIlVIYG
!1/ 1/66 71.4a5.m 71,405. @a 71.405.aa
51 i 147 120.80Q. Ma 5.750Bati 71,485.80 191,485.88 ia,512.40 100, -992. ka
xi 1/87 57,955. e0 67,955. @a 1 e, 5! L4Q 57,442.68
51 I/@ i25,m~.a0 6.05maa 67,955. ea 19t,~55. Be ia.512.40 142, 442.6~~
c i!! !/66 64,173.75 64,173.75 18,5:2.40 53,661.35
51 1/65 !sa, em. ea 6.3ae80G 64,173.75 194,173.75 10,512.4@ !B3,661.35
lil 1/64 66,078.75 La, 078.75 18,5:2.4@ 49,566.35
21 i /sa 148, ma. m 6. 55eam 5~2, ~78.75 ma. 073.75 10.52. rB l64, 566.35
!I/ 1/30 55,493.75 55.493.75 !@,5:2.4O 44, ?h!. 35
5! i 191 !50, 088. 88 6.6BB@80 55.4?3.75 285.4?3.75 i0. 5:2.4@ 194,9b!. 35
!i! i/3i 50, 393.75 5a.333. 75 18,s:~). 46 23,661.35
!if !I% 44. az. 75 44.833.75 10,512.40 54,321.55
5/ i 19; 178, om. m 7. meoa 44,333.75 4i4.633.75 10, 5!Z. 4@ Z84.321.35
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3 i 112 164 B#D, 4M 6,356688 5@,593,75 ?!& 393.75 10,52,4Q !4'3,861.35
ill 2/93 36.642.25 38.641.25 1@,52. 40 28.32a.65
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51 1/54 185, am. a@ 7.130~0 3E. a+!. 25 223, b4!. 25 10, 52. 40 213,326.65
1:/ 1/94 32, Z7.58 22, 2?7. 56 19~52.48 21,715. lg
111 1/35 25,!58.75 25.158.75 18.5:2.48 14.646.35
5f 1/95 195.0BQ. B8 7.2SB00B 32.227.5B 227.2'27.5e ia.w.48 a6m. 10
51 if96 218,01b0.8@ 7.350800 25,156.75 235,158.75 273.322.40 28, !6J.!
111 1/36 17,441.3 17,441.25 a. 742. '
51 1/97 ?E, BO@. aa 7.45aaaa !7,44!. 25 Z42-441. 25 2L):, 7iB. 65
!1/ 1/57 9. @sa. 80 9. e60. 0a 9. am. ee
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51 !/3fi ~~5aa.m 7.53ame 9, 060. m 249, ~60.80 244. em. aa
2, m, am. 00 1,074.1Ei.88 3.24,liS. 80 533.95a.50 2, ~a. 174.46
--____-_______ ------------- ----I---____- _-____-------- ----_---_---__ -----_-------
-_----____--- ___-_____-_ ---__--I_--- -_____-_______ _-_I________ ---_----___--- _I--______-_ _------------ --_-__-_-__-__ _-___--__-___ -----_-----_-- -----------__-
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CERTFICRTES (3F PFIRTICIPATION
TWELVE YE#!? lSSliE
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-----_-__^__________--_-_ _________________________
CQpygpvED I:,iTERzST FUND
CELIVERY DE: 5! 1/86
---------- _--_-_--_______ -------__-_______-__--_--
BEG I Nh' 1K6 GCCAXE9 COGTR. FEND MET ERwE CFIP!TBL!ZED SOTR? FJNDS BO%D I~TE~EST E ;lE? 122
8ESERVE IN:. ER9kItGS RYRILRP-!,E CR91TRil!ED BR :!;DING FRL i)>m *LI ry-cw.j~ ,Cli-- Eaz?iIxGS
? 8.0@@@&0 x1 < ?.Bee@@@ YJ <I@@. BB00eB Z)
58,835.43 !B, 5i2. 46 2,859. I? 7!, 485.8# 7:. 485.W
:a. 512.48 2. 6%. 17 7:. 44% @a
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:;; I/& -------------- --_-_-____---- -_--_-------- --__-__-----_ ______________
------..------ ------------_- -----__-__---- __-__-------_- _--__--__----_ ____-______- ---c---------- ----------_-_ ----_-_------_ --___________
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CERi ii: I WTES DF PAR? 1 CI PAT I Un
TWEL'iE YEF14 ISSUE
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CDXS72GCTIZK 7d)in --- ------------- __---_____-____-_
qy; 71 rr J eLbLd:+\ DRTE: 51 1/86 <
DRRN CC!NST%UC?I&N CONSTRJCTIUN SET SF,. !:Vi. RRTE CDWR. FEND DEB7 SiRKCE CRPITALIZED RtWRINIM
DRTE FUWE BRLRHCE D3fiFiU NEEDED FUND DRM OF DRFlW EGFiNlNGS RESERVE IN:. WRKNES WNSR FJt
k' ! 8.0mm z) I 7.aw0~ zi ------- ------------ ---------- ---------I -------- --_--_--I- __--_--___--_ --_-------_-- ----------.
'/ 7; I!K :, €40, ~84. 67 i,~, aaE. 88 1.64a,0art. 6T 7. eaeem i8.915.33 -a, ------------- __--__-___-___ --__---__--__- I------------ I---------
1,659.0a8.0a :,64aO,m4.57 16,915.35
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