HomeMy WebLinkAbout1989-07-11; City Council; 10122; COMMUNITY FACILITIES DISTRICT FINANCIAL ADVISORa
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44 C1-a OF CARLSBAD - AGEN- BILL ,I
AB# 18, la* TITLE: DEF
MTG. 7/11/89 COMMUNITY FACILITIES DISTRICT CIT'
CIT' DEPT.
RECOMMENDED ACTION:
FIN FINANCIAL ADVISOR
Adopt Resolution No. 5?-92%electing the firm of Kadie-Jensen, Johnsc Bodnar to act as financial advisor for the proposed Mello-Roos Commur Facilities District, and supporting funds.
ITEM EXPLANATION
In January, 1989, the City Council directed staff to study the feasibi of forming a Mello-Roos Community Facilities District (CFD) to finance construction of major pub1 ic improvements. As this study nears completion, it will be necessary to review the proposed tax structure debt program for reasonableness and marketabi 1 i ty from the f inan perspective.
Staff is currently working with the firm, of NBS/Lowry to produce funding model and general district description. The financial advis (FA) role is to verify the results of the NBS model and to be sure the City can market the Mello-Roos bonds. The FA is also called UFO confirm the cash flow estimate and assumptions related to suppor
future debt service payments from CFD taxes.
The staff has requested proposals from three firms specializing in type of service: Fieldman, Rolapp & Associates, Whipple and Assoc' and Kadie-Jensen, Johnson & Bodnar. Although the firm's proposal Vi its pricing methods and terms, the decision to employ Kadie was I primarily on the type of service needed by the City.
Prices based on the proposals were as follows:
Fieldman, Rolapp & Associates $25,000 Whipple and Associates
Kadie-Jensen, Johnson & Bodnar
Hourly - expected to i about $lO,OOO/mont h
Hourly - not to exceec $17,500
Kadie's proposal provided the staff the ability to work closely NBS/Lowry without trying to fit the CFD model to pre-existing mode to reinvent the District's parameters.
FISCAL IMPACT:
The entire costs of District formation including fees for fina consultants will be funded by the City. All expenditures related t Mello-Roos District will be recovered from bond proceeds when an occurs. The Council is being asked to appropriate $17,500 froi unappropriated fund balance to cover the expected cost of these cons1 services .
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Page TWO of Agenda Bill No. ID,/ 2s
EXHIBITS :
1. Resolution No.%-a?selecting the firm of Kadie-Jensen, Johr and Bodnar as financial advisor.
Proposal from Kadi e-Jensen, Johnson & Bodnar. 2.
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RESOLUTION NO. 89-229
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, SELECTING THE FIRM
OF KADIE-JENSEN, JOHNSON & BODNAR TO ACT AS
FINANCIAL ADVISOR FOR THE PROPOSED MELLO-ROOS COMMUNITY FACILITIES
WHEREAS, the City Council has directed staff to investigatc
creation of a City-wide Mello-Roos Community Facilities District to
a wide range of Capital Improvements; and
WHEREAS, the creation of such a District requires a det
analysis of project costs, funding schedules, tax formulas and cash f
and
WHEREAS, the City staff has worked with the firm of NBS/Low
create proposed tax formulas and project schedules; and
WHEREAS, these taxing formulas and cash flow projections shou
reviewed by an independent financial consultant prior to Dis
formation to verify the marketability of any district that may result
WHEREAS, the City of Carlsbad may recover the cost of any consu
services related to the creation of the Mello-Roos Community Facil
District from bond proceeds from such District; and
I WHEREAS, the City staff has received proposals from three qual
firms; and
WHEREAS, the firm of Kadie-Jensen, Johnson & Bodnar has
selected by the City Council as the firm most able to meet the nec
the City in this endeavor.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the C-
Carlsbad, as follows:
1. That the above citations are true and correct.
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2. That the proposal of the firm of Kadie-Jensen, Johnson & B
is hereby accepted by the City Council.
3. That funds in the amount of $17,500 is hereby appropriated
the General Fund unappropriated fund balance to the Finance Depar
budget to cover the costs of the financial advisor services.
PASSED, APPROVED AND ADOPTED by the City Council at a re
meeting thereof held on the llthday of July , 1989, k
following vote, to wit:
AYES: Council Members Lewis, Kulchin, Pettine, Mamaux and I
NOES : None
ABSENT: None
ATTEST:
ALETHA L. RAUTENKRANZ, City Clehk lL2crL /. Ps
(SEAL)
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CARL KADI ELEANOR ]EN 6092 CUMULUS SAN DIEGO, CALIFOI
FAX (619) 296:
WLLQUGHBY C. Jl P.O. BOX 13 402 W. OJAl AV OjAI, CALIFOW1 (805) 64672( FAX (805) 646-
ERNEST B. BO1 233 DEXTER PI
SAN RAMON, CAL (415) 829.34
KADIE - JENSEN, JOHNSON & BODNAR
Municipal Financing Consultants, Inc.
(619) 295-259
March 30, 1989
FAX (415) 829- CITY OF CARLSBAD
Attn: James Elliot Finance Director 1200 Elm Avenue Carlsbad, CA 92008
RE: Financial Consulting Services - Community Facilities District(s) to Provide Major Infrastructure Financing
Dear Mr. Elliot:
KJJB is pleased to offer its services as Financial Consul1
to the City of Carlsbad for the planning and implementation of
Community Facilities District(s) to finance major infrastructui
capital improvements (the "Projects"). The description of
services leading to the authorization of bonds is broad in sco]
with the intention that we work closely with City Staff, takin(
specific direction from staff prior to undertaking the various
tasks herein set forth.
PLANNING AND CFD FORMATION SERVICES
Our services will include, but will not be limited to the
following:
0 Review all cost estimates, tax rate structure, proje
build out and other material developed to date.
0 Based on this review, make recommendations as to any
future elements which should be considered in
developing the final plan.
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City of Carlsbad
March 30, 1989
Page 2
o Working with either the model developed by MBS or a
model of our own creation, depending on the efficienc
of either approach in terms of time required, test or
cause to be tested various alternate scenarios to
determine the sensitivity of the proposed tax formula
to varying assumptions.
0 Based on any findings as to sensitivity which might
adversely affect the success of the program, recommer
suitable changes in the tax formula to the City.
0 As directed, write, or assist in the writing, of any
reports or descriptions necessary for presentation tc
City Council, property owners or other interested
parties.
0 Attend such meeting as may be requested by the City 1
explain or assist in the explanation of the proposed
financing plan.
0 Maintain a continuing review of the Mello-Roos tax
formula and all of the assumptions leading to its
development, in terms of the marketability of
securities. Advise the City as to any changes belie
to be necessary or desirable to assure marketing of
securities at the best possible interest rates.
0 Assist the City, Bond Counsel, Special Tax Consultan
or other parties in drafting any necessary legal
documents and/or reports required for the
implementation of the financing plan.
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City of Carlsbad
March 30, 1989 Page 3
0 Provide whatever other review, assistance, analysis z
recommendations may be requested by the City to be
assured that the proposed tax formula and financing
plan are feasible and implementable and provide the
best possible solution to financing the Projects.
0 Assist the City in developing a policy with respect 1
disclosure of the Mello-Roos tax to purchasers of
property within any City CFD. This assistance would
include providing sample disclosure statements used
elsewhere as well as drafting, or assisting to draft
the disclosure statement which is determined to be
appropriate for this undertaking.
0 Once bonds are authorized, determination should be m
as to whether or not the best interest rates could b
achieved through a negotiated sale of the bonds,
competitive sale, or some combination of the two. K
will work with the City Staff to make a determinatio
in this regard and will prepare any written material
requested by City to support the determination.
Fee for Services
Our fee for the above services is based on an hourly rate
$125 plus reimbursement for out-of-pocket expenses outside of
normal office overhead, payable monthly. The total amount due
hereunder would not exceed $17,500 without specific authorizat
from the City. We would not undertake any of these services
described above prior to being directed to do SO by City Stafl
If at any time it becomes clear that the City’s request j
services may result in exceeding this maximum budget, we woulc
inform the City and request additional authorization.
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City of Carlsbad
March 30, 1989
Page 4
BOND MARKETING SERVICES
The services to be performed by KJJB with respect to
marketing of bonds is described in the following section of thi
proposal for both a competitive and negotiated sale of bonds.
Services to be Provided Method of Salc
Public Negoti;
1. Recommend specific terms and conditions X X
of the issue including debt amortization
schedule, estimated interest rates, call
and redemption features (if any), and
revenue sources for the repayment of the
debt to be incurred.
2. Assist City's Legal Counsel and Bond
Counsel in the preparation of:
a. Resolution of issuance and legal X X
documents.
b. Notice of public sale. X N.A.
3. Prepare the text of a Preliminary X X/N.
Official Statement which describes the
securities to be issued, sources of funds
to repay the debt, the City's Project
including costs and sources of funds, the
City's financial position, and the
economic base of the City.
4. Prepare content and format of a Request N.A. X
for Proposal To Furnish Underwriter
0 ~. City of Carlsbad March 30, 1989
Page 5
Services To Be Provided Method of Sale
Public Negotiz
Services (RFP) for distribution to
Underwriters. Assist the City in:
X a. Evaluating Underwriters' responses N.A.
to the RFP and the short-listing of
Underwriters for interview.
X b. Participate in the Underwriter N.A.
interviewings.
X c. Assist City Staff in designating the N.A.
Underwriter, or combination of Under-
writers, that appears to be best
qualified to underwrite the City's
securities.
N.A. X 5. Distribute the Preliminary Official
Statement, Notice of Sale, and Legal
Documents to potential purchasers of
the securities.
N.A. 6. Attend public bid opening, calculate X
interest costs bid, and recommend the
award of the securities or rejection of
bids.
X 7. Review and advise the City with respect N.A.
to specific provisions of the Under-
writer's Purchase Contract as they relate
to issuance costs to be borne by the City
and Underwriter; elements of the gross
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City of Carlsbad March 30, 1989 Page 6
Services To Be Provided Method of Sale
Public Negotiz
spread (discount) proposed by the Under-
writer, i-e., take-down, expenses, under-
writing risk, and management fee; pro-
posed interest rates; redemption features
of the issue; and terms and conditions
for sale and delivery of the securities
to the Underwriter.
8. Coordinate delivery of securities with X X
the City, Bond Counsel, Underwriter,
Underwriter's Counsel, Bank Trustee, and
credit enhancer.
Fee for Services
Our fee for services would be based on an hourly rate of
$125 plus reimbursement for out-of-pocket expenses not to excel
0 For a public sale of bonds, $30,000 plus reimburseme
for authorized printing and mailing costs,
0 For a negotiated sale of bonds where KJJB prepares t
Official Statement, not to exceed $27,500 plus
reimbursement for authorized printing and mailing
costs.
0 For a negotiated sale of bonds where KJJB does not
prepare the Official Statement, not to exceed $12,50
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City of Carlsbad
March 30, 1989 Page 7
A BRIEF SUMMARY OF PRINCIPALS ASSIGNED TO THE PROJECT
EXPERIENCE AND QUALIFICATIONS
Carl Kadie will be in charge of all services provided undc
this agreement. In the case of services prior to the authori-
zation of bonds, Mr. Kadie will be working directly with the C
and other City consulting staff.
If KJJB is given the responsibility for preparing the
Official Statement, Willoughby Johnson will be working under M.
Kadie's direction in the preparation of this and related
documents.
Experience and Qualifications
Mr. Kadie has provided municipal financing services to
agencies of local government on a full time basis since 1963.
His experience includes over 100 Special Assessment Districts
15 Community Facilities Districts to date.
In addition to Financial Consulting, Mr. Kadie also offer
services in the area Assessment Engineering and Special Tax
Consulting. A thorough grounding in these disciplines is
believed to be essential in order to provide the range of
assistance needed in analyzing and participating in the
development of the final tax formula as well as determining th
market implications of various decisions which may be made.
Mr. Willoughby Johnson, who will be responsible for
preparing the Official Statement and related documents, is an
attorney. Prior to joining KJJB he was a partner and bond
counsel in the firm of Orrick, Herrington, and Sutcliffe, the
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City of Carlsbad
March 30, 1989
Page 8
largest bond counsel firm in the United States. Mr. Johnson ha
been responsible for preparing Official Statements for KJJB sir
joining the firm in 1981,
Yours very trul @&?& resident
CK:bt