HomeMy WebLinkAbout1987-06-23; City Council; 9066; PURCHASE OF COMMUNITY DEVELOPMENT BUILDINGq! .- ... t CI~()OF CARLSBAD - AGEN~BILL ;,’/ ” ; i 3 ’ ( i. ’ ’:
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AB# ydd6 TITLE: DEPT, I MTG.6/23/87
DEPT. FIN
PURCBASE OF COMMUNITY DEVELOPMENT BUILDING JCIPI
CITY I I I
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RECDM.WMD WION:
Adopt Resolution No. 9/94 authorizing the City Manage
proceed with the purchase of the Community Development
Building using Certificates of Participation or lease
agreement.
ITEM EXPLANATION:
On April 18j 1986, the City entered into a lease agreeme with Palomar Airport Business Park for the building loca
at 2075 Las Palmas Drive. This building has been used t8
provide space for the Planning, Engineering, Building,
Development Processing, Municipal Projects, and Utility Maintenance Departments.
The City took occupancy of the ,building on August 1, 1981
and has a four year lease which runs through July 31, 19
Under the terms of the lease the City has an option to b.
the building prior to August 1, 1987 for a total cost of
$1,602,160 (including the purchase price of the, $1,350,1
plus unamortized tenant improvements of $252,160).
On August 1, 1987, the purchase price increases by $110,
to about $1,710,000. The value of tenant improvements
decreases by about $6,000 per month thereafter.
Present plans call for the City to occupy this building
long term basis. There are no plans to construct other facilities or to reduce the need for office space in the
future. This prospect for continued use of the Las Palm
building brings the City to a decision point. Should th
City continue lease payments or purchase the building un
the option provided in the lease agreement?
Staff is recommending that Council consider purchase of
building using Certificates of Participation or a simple
lease purchase agreement. This would allow the City to possession of the building and property and to gain an e
position in the building rather than paying rent for off
space.
The selection of either a COP or a lease agreement will
based on the bottom line cost to the City. Should the
Council approve the acquisition of this property, propos will be obtained on both options showing current market and financing costs. The least expensive financing plan be recommended to the City Council for final approval.
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Should financing not be available by the July 30, 1987
deadline, staff is recommending the use of Public Facili
Fee funds to temporarily support the purchase and close
escrow. These funds will be immediately reimbursed from
proceeds of the lease or COP agreement.
The purchase of this building is a legitimate Public
Facilities Fee project. Any COP or lease payments for f years will be made from the PFF Fund rather than the Gen
Fund as is the current practice.
FISCAL IMPACT:
The shifting of lease or COP payments to the Public
Facilities Fee Fund reduces General Fund expenses by $23
per year. Public Facilities Fee revenue would be pledge
support the lease payment or debt service cost reducing
amount of PFF funds available for other projects. Since
is a PFF project, it is exempt from Proposition H spendi limitations.
The City presently has no equity interest in the Las Pal
building. The purchase of this building through either
method gives the City ultimate ownership and an asset wh may be used for any municipal purpose.
Under either of the proposed plans, the net cost to the
over ten years will be equal to or less than the total o present lease payments.
From 15% to 20% of the annual lease/purchase or debt ser payments could be charged against the Water and Sewer Fu as their portion of the cost based on space occupied. T
would reduce PFF annual costs by $35,000 to $45,000 per
EXHIBITS:
1. Sample lease/purchase and Certificate of Participati Schedule.
2. Letter from Palomar Airport Business Park, May 28,
3. Resolution No. 7/34 authorizing the purchase of
Las Palmas building.
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CITY OF CARLSBAD
COMPARISDN OF LEASE/PURCHASE ANI)
CERTZFICATE OF PARTICIPATION
PROPOSED ACfiUfSITXON OF LRS PFILMAS FACILITY
CERTIFICATE
LEASE OF
PURCHASE PARTICIPATION "~.""""""""""""""""""""~"""""~
INTEREST KATE 7.75 7.75
SOURCES OF FUNDS
DEBT F'FCUCEEDS 1 , 63:) 9 Qc:)(:) 2 9 t:) 18 9 r:)c:)(:)
TOTAL PROCEEDS
""".""""""""""
1 ~ 620 , r:)c:)O 2 y 0 18 , (:)(:)(:) ""..""~"."~""""."" ""-."".-.""-.""~"""" "" "-
USES OF FUNDS
PROPERTY ACQUISITION 1. 'I &(:Q ~ (I)(:>() 1. 9 bo2 , (:)t:)t:) DEBT SEIW ICE RESERVE ..- 293 9 c:)c:)c:t
OTHER COS1-S 1 8 , (:N:H:) g 7 , (:) 0 0 UNDERWRI TER ' S D'I. SCOUNT " 66 y QQQ -."""""".- "_._ ".""""""
'TOTAL USES OF FUNDS 1 , 620 9 (X)(:) 2 , (1) 18 , O(:)(:)
"""""""""""" """""""""""""- """""-""""""""""""""""""""-."~
PAYMENT SUMMARY
YEAR 1
YEAR 2
YEAR 3
YEAR 4
YEAR 5
YEAR 6
YEAR 7
YEAR 8
YEAR 9
YEAR 10
238 ~ 7(:)(:)
238 , 7(:)(:)
238,7(:,0
233, 766
238 9 700
238 'I 7(:)(:)
238 9 7(:K:)
1 .s 8 , 7 Q (:)
238 y 7oo
c)-
238 , 70 1
'l"OTE.'11. PAYMENTS 2 g 387 7 [)()I
LESS:
RESERVE FUND I
fI\ITEREST ON RESERVE FUND
FUR 1.0 YEARS -
277 9 36(:)
c7 .~97,3&:)
297,360
L97 y 36r:)
297,36(:)
-3
297,36(3
297 'J 36C)
297,360
297 y 560
297,360
2 9 973,5C)[)
293 , (,QO
3 1 r:) , $382 """""-"""""""
NET C:ASH FLOW c) ~,387,(:)01 2,369,718
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EXHIBT 1
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Qusiness Centeh Developed By MlTSUl FUDOSAN (USA) INC.
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May 28, 1987 ,' . i
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Mr. Jim Elliott
City of Carsbad
1200 Elm Street
Carlsbad, California 92008
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Re: Purchase Price Building - Las Palmas
Dear Mr. Elliott:
The purchase price based on the unamortized Tenant Improvement
cost plus a base price of $1,350,000.00 will be $1,602,160.00.
Using the remaining balance in "percent of original loan
amount chart", page A132 in the Realty Bluebook, the unamortize
Tenant Improvement cost is 78.8% of $320,000.00 or $252,160.00.
This amount added to the base equals the above figure.
If you have any questions, please call me.
Sincerely yours,
MITSUI FUDOSAN (USA), INC,
bhJJL
BERNARD w. &ILMORE
Vice President
BWG : rcm EXHIBIT 2
11 20 Sycamore Avenue, Suite A Vista, California 92083 (61 9) 438-1 877
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RESOLUTION NO. 9134
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD, CALIFORNIA, APPROVING THE PURCHASE OF THE
BUILDING LOCAATED AT 2075 LAS PALMAS DRIVE, CARLSBAD,
CALIFORNIA
WHEREAS, the City Council has previously approved the le;
of the property located at 2075 Las Palmas Drive, Carlsbad, Califor
(the "PROPERTY") , and
WHEREAS, the City Council has determined that it is in th
public interest to acquire the PROPERTY for municipal purposes, and
WHEREAS, the existing lease agreement allows the City the
option to purchase the PROPERTY on or before July 31, 1987 for a pr
of $1,602,160, and
WHEREAS, the City Council desires to exercise this purcha:
option on or before July 31, 1987, and
MEREAS, the purchase of the PROPERTY is a legal expense (
the Public Facilities Fee Fund and is therefore exempt from the
spending limit imposed by the voters under Proposition H.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the
City of Carlsbad, California, as follows:
1. That the City Manager shall commence the acquisition
process for the PROPERTY at a price of $1,602,120 plus escrow and
related costs.
2. That the City Manager shall return to the City Council
the first available meeting with a recommended lease/purchase agreemt
or underwriting agreement to finance this acquisition.
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3. That the Finance Director is authorized to temporaril
transfer the amount of $1,700,000 for the acquisition of this prope
said amount representing acquisition costs, closing costs and relat
expenses, from the Palomar Airport Road Assessment District project
the PROPERTY acquisition project. within the Public Facilities Fund.
4. The above transfer shall remain in effect from July 1
1987, until such time that replacement funds are received from the
acceptance of a lease/purchase agreement or a COP. At that time thc
transfer shall be reversed and the Palomar Airport Road Assessment
District project will be returned to full funding status.
5. Future lease payments or debt service payments will be
made from the Public Facilities Fee Fund and, if necessary, augmentc
by support from the General Fund in the event of a PFF revenue
shortfall.
PASSED, APPROVED AND ADOPTED at a regular meeting of the
Carlsbad City Council held on the 23rd day of June 9 1987 by
following vote, to wit:
AYES: Council Members Lewis, Kulchin, Pettine, Mamaux and
NOES: None
ABSENT : None - &/[A -2 -2 - """""""_
CLAUDE A. LEWI , Mayor
ATTEST :
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ALETHA L. RAUTENKRANZ, City Clerk 1
(SEAL)