HomeMy WebLinkAbout1993-03-23; City Council; 12127; Refunding of Multifamily Housing Revenue Bonds. CbY OF CARLSBAD - AGWA BILL py f
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AB # L&" =REFUNDING OF THE MULTIFAMILY -w * MTG. 3/23/93
OF 1985 (LA COSTA APARTMENTS) DEPT. CM
HOUSING REVENUE BONDS - SERIES A
DEPl
CITY
CITY
I I 1 RECO"~~~ ACTION:
Adopt Resolution No. 4 3 -b I directing the City Manager to proceed with
refunding of the Multifamily Housing Revenue Bonds - Series A of 1985 (La Cc
preparation of the necessary documents.
Apartments), appointing the members of the financing team, and ordering
IT" EXPLANATION
In April 1985, the City of Carlsbad issued $15,920,000 in Multifamily How
Revenue Bonds to finance the construction of the La Costa Apartments. '
resulting projects provided about 320 units contained in 20 two-story buildi
located at the southeast comer of La Costa Boulevard and Rancho Santa Fe Rc
Sixty-four of these units were to be reserved for occupancy at rents affordablc
individuals of families of lower income. The project was successfully construc
and has served the community needs for affordable housing well.
All of the bonds issued to finance this project were term bonds due on Decerr
1, 1995, bearing an interest rate of 8.875%. Under today's market these ba
could be refinanced at a much more favorable interest rate, thereby saving
property owner a significant amount of money. In addition, as part of
refinancing (known as a refunding to the municipal bond industry), the City has
opportunity to benefit by making minor modifications to the terms of the agreerr
between the property owner and the City.
The refunding of these bonds is allowed under both federal and state law, as I
as the documents governing this 1985 issue.
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Staff is recommending that the City proceed with the refunding effort. The
step would be to appoint the members of the financing team. The recommen
team is as follows:
Bond Counsel - Stradling Yocca Carlson and huth - Bob Whalen of
office prepared the documents used in the original issue and has 2:
currently underway, the Seascape Multifamily Housing Bond Issue.
addition, Mr. Whalen has recently been the bond counsel on several sirr
instrumental in assisting the City with the other refunding effort tha
I refunding efforts for other cities.
Undenvriter/Banker - Dean Witter - Senior Manager, and Bank of Amei
Co-manager - The City selected Dean Witter to assist with the refundin
the Seascape Bond Issue in 1989. Although this refunding is still being I
up because of litigation between the property owner and their letter of cr
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Page Two of Agenda Bill No. / 2; I27
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provider, much of the work done by Dean Witter on Seascape is transferrable to
issue. Peter Ross of Dean Witter would be the senior member of their financ
team. Staff is recommending the inclusion of Bank of America as co-manager
two reasons. First, the property owners have asked that we include Bank
America in the financing team. Although the City typically does not incl
members in a financing team specifically at the request of a property owner, in
case the property owner has the greatest reason to keep financing costs down
interest rates at a minimum. The City agreed to a similar arrangement on
Seascape refunding. Second, Bank of America is writing the letter of credit that '
stand behind this bond issue. If, for any reason, the annual debt service is not I
by the property owner, Bank of America will have to pay the bond holders. S
believes that their interest in this financing will be increased by being part of
financing team.
If adopted, the attached resolution will provide the staff with the necessary direcl
to proceed with the refunding, and to assemble the financing team. Later in
process, Council will be asked to approve the final bond documents. Following 1
action the staff will proceed with the sale of bonds.
mSCAL IMPACT
The City of Carlsbad will experience no additional costs because of this financ
because of this action. Staff time will be dedicated to this effort by the Housing
Redevelopment Finance, Attorney, City Clerk and City Manager's Office. This :
time will result in the City receiving approximately $40,000 at the time of the b
sale, and about $20,000 each year during the life of the bonds. All financing c will be paid out of the issue including financing team fees and related expenst
The City is not obligated in any way to repay either the existing Multifamily Bc
or the proposed refunding bonds. The obligation is laid on the property owner
the letter of credit bank (Bank of America). In the event of non-payment, the le
of credit bank will continue payments to bond holders and begin action against
property owner to collect any delinquent payments.
EXHIBITS
1. Resolution No. 9 3 - 6 I directing the City Manager to proceed with
refunding of the Multifamily Housing Revenue Bonds - Series A of 1985
Costa Apartments), appointing the members of the financing team,
ordering the preparation of the necessary documents.
2. Letter Dated March 4,1993.from Rodney F. Stone, So Cd Development, :
owners of the La Costa Apartments project requesting the refunding of
1985 Multifamily issue.
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RESOLUTION NO. 93-61
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF CARLSBAD, CALIFORNIA, DIRECTING THE CITY
MANAGER TO PROCEED WITH THE REFUNDING OF
SERIES A OF 1985 (LA COSTA APARTMENTS),
APPOINTING MEMBERS OF THE FINANCING TEAM,
AND ORDERING THE PREPARATION OF DOCUMENTS
THE MULTIFAMILY HOUSING REVENUE BONDS -
WHEREAS, the City of Carlsbad issued bonds dated April 1, 1985 for
purpose of constructing a multifamily housing complex under the mortgage revt
bond law in existence at that time; and
WHEREAS, the property owners of the La Costa Apartments, So
Development, Inc., have requested that the City initiate a refunding of this issu
allowed under the optional.refunding clause in the existing Bond Indenture; a
WHEW such refunding is in compliance with both federal and s
statues governing the refunding of existing debt; and
WHEREAS, the City Council of the City of Carlsbad does find that
housing units being provided to low and moderate income families is in the PI
benefit and should be continued.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the Cit
Carlsbad, California as follows:
1. That all recitations are true and correct.
2. That the City staff is hereby directed to pursue the refunding oi
Multifamily Housing Revenue Bonds - Series A of 1985 (La Costa Apartments)
to return with documents necessary to accomplish said issue.
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3. That the financing team for this issue shall be comprised of
following members: Stradling, Yocca, Carlson and Rauth as Bond Counsel, 1
Witter, Reynolds, Incorporated as managing Underwriter and Bank of he
Incorporated to act as co-manager be returned to Council for approval.
PASSED, APPROVED AND ADOPTED at a regular meeting of the City Coi
of the City of Carlsbad, California, held on the 73rd day of MARCH
1993, by the following vote, to wit:
AYES: Council Members Lewis, Stanton, Nygaard, Finnila
NOES: None
ABSENT: Council Member Kulchin
ATTEST:
AAxL dph
ALETHA L. RAUTENKRANZ \
(SEAL)
\; h( a so CA~EVELOPMEN'I
c - . " i y9:fU BUILDERS 4. DEV
915 Camino Del Mal
Del Mar, Calif1
FAX (61'
(61'
March 4, 1993
Mr. Jim Elliot Clty of Carlsbad City Hall 1200 Carlsbad Village Drlve
Carlsbad, CA 92008
Re: $15,920,000 City of Carlsbad Multifamily Revenue Housing B
1985 Series A
Dear Jim:
Pursuant to my conversation wlth Evan on today's date, I am
requestlng the City of Carlsbad. to submit a refunding request r
above project to your City Council.
We would like to proceed with the above refunding using underwr
counsel of Newnan and Associates, Paine Webher or Bank of Ameri We would like to have the option of any one of the three.
Bank of America will be issuing the credit enhancement. We cur have the approval from the Real Estate and Credit Departments i Orange County and Los Angeles. A package is being submitted tc San Francisco Credit Department, and we should have approval wj the next two weeks. According to .Chris Warmuth, who is one of senior vice presidents of real estate, it is just a matter of formality to get this approval.
If you have any questions, please contact me.
Sincerely yours,
d .,q fJ[ h
Rodney F. Stone, General Partner La Costa Partners
RFS : lm
cc: Evan Becker