HomeMy WebLinkAboutMINUTES - 07101990 - IO.2 1.0.-2
TO: BOARD OF SUPERVISORS
Contra
FROM: INTERNAL OPERATIONS COMMITTEE C^JLJJIC�
G.
ounty
DATE: July 10, 1990
rq cou�'�
SUBJECT: Designation of Investment Bankers and Bond Counsel on
Pending Single-Family and Multi-Family Housing Bonds.
SPECIFIC REQUEST(S) OR RECOMMENDATIONS(S) & BACKGROUND AND JUSTIFICATION
RECOMMENDATIONS
1. For the pending Single-Family Mortgage Bond Issue designate:
A. Paine Webber Inc. , as Senior Managing Underwriter,
Grigsby Brandford Powell as Co-Managing Underwriter.
Should the transaction exceed $30, 000, 000. 00 add Dean
Witter Reynolds as a second Co-Manager.
B. Designate Orrick Herrington & Sutcliffe as Bond Counsel
and Pamela Jue as Co-Bond Counsel.
2 . Pending Multi-Family Mortgage Revenue Bonds (El Cerrito IBEX
Project) :
A. Designate Newman & Associates as Senior Managing
Underwriter, and M.R. Beale as Co-Managing Underwriter.
B. Designate Arnell & Hastie as Bond Counsel.
FISCAL IMPACT
BACKGROUND/REASONS FOR RECOMMENDATIONS
The County is preparing to issue both Single-Family Mortgage
Revenue Bonds and Multi-Family Mortgage Revenue Bonds. These
issues are expected to occur in calendar year 1990, however, they
could occur in 1991. Pursuant to Board of Supervisors adopted
procedures governing the designation of Investment Bankers and Bond
Counsel for Capital Financings the Board has previously established
a Qualified Advisors' List for Investment Bankers and Bond Counsel
for the financing types involved. The Deputy Director-Redevelopment
has formulated recommendations to this Committee (attached) which
give substantial weight to the following criteria:
1. Provide for a variety of firms to be provided an
opportunity to handle County Business.
2 . Provide preference where appropriate and feasible to
firms located or having offices in the Bay Area; and
3 . Assure that an appropriate portion of the County's
business is provided to MBE/WBE Firms.
CONTINUED ON ATTACHMENT: _X YES SIGNATURE:
RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATIO V B07 COMMI
APPROVE OTHER L
SIGNATURE(S) : SUNNE WRIGHT MC PEAK TOM POWERS
ACTION OF BOARD ON July 10, 1990 PROVED AS RECOMMENDED x OTHER
VOTE OF SUPERVISORS
I HEREBY CERTIFY THAT THIS IS A
X UNANIMOUS (ABSENT ) TRUE AND CORRECT COPY OF AN
AYES: NOES: ACTION TAKEN AND ENTERED ON THE
ABSENT: ABSTAIN: MINUTES OF THE BOARD OF
SUPERVISORS ON THE DATE SHOWN.
cc: Community Development ATTESTED /0 1990
CAO PH BgrCHELOR, CLERK OF
Auditor-Controller THE BOARD OF SUPERVISORS
County Counsel AND COUNTY ADMINISTRATOR
BY L,i DEPUTY
CONI RA Closm CO NrY
QIMMONrrY DEVELCE1ENr UDWU ENr
DATE: June 18, 1990
TO: FINANCE COMMITTEE
Supervisor Robert Schroder
Supervisor Tom Torlakson
INTERNAL OPERATIONS COMMITTEE
Supervisor Sunne McPeak
Supervisor Ta
FRCK: Jim Kenn
Deputy D' ector- op:Bankers
t
S[BTF7Cr: Desi do Investment and Bond Counsel
The County is preparing to issue its 1990 Single Family Bonds and its 1990-B
Multi Family. Bonds. Authority for the bonds is to be applied for in July
and received in August Issuance anticipated by the end of September. A
description of each of the programs follows:
A. 1990 Single Family Bonds. In order to keep the program competitive
given local housing market changes, the County is proposing to
issue bonds that will permit both government loans - FHA & VA loans
- securitized by GNMA, (Government National Mortgage Association)
and privately insured mortgages securitized by FNMA (Federal
National Mortgage Association) securities. This will permit
mortgages to be made to first time homebuyers purchasing homes that
cost more than-' $124,750 - the FHA limit - or $144,000 - the VA
limit. Combining GNMA & FNMA securitization for a Single-Family
Bond issue has been done only once. Contra Costa County would be
the second.
B. 1990-B Multi-Family Bonds. The Multi-Family Bonds would be used
to finance a 137 unit family and senior housing development in the
City of E1 Cerrito. The bonds would carry FHA Insurance as credit
enhancement. The E1 Cerrito Redevelopment Agency will be
purchasing land and leasing the property to the developer to make
the project financially feasible.
BACKGROUND
On January 30, 1990, the Board of Supervisors adopted procedures governing
the designation of Investment Bankers and Bond Counsel for Capital
Financings. Pursuant to those procedures the Board of Supervisors on May 22,
1990, approved a Qualified Advisors List for Investment Bankers and Bond
Counsel for Single-Family Mortgage Revenue Bond Financings and Multi-Family
Mortgage Revenue Bond Financings.
w:
Memo to: Finance Committee
Internal Operation Committee
June 18, 1990
Page 2
In selecting Investment Bankers and Bond Counsel staff was directed in
formulating their recommendations to the Board Committees to give substantial
weight to the following criteria:
1. Provide for a variety of firms to be provided an opportunity to
handle County Business.
2. Provide preference where appropriate arra feasible to firms located
or having offices in the Bay Area. ,
3. Assure that an appropriate portion of the County's Business is
provided to MBE/WBE firms.
In addition staff was directed to clarify the status of the law firm of
O'Melveny & Myers to determine whether they qualify as a Minority Owned,
arra/or or Woman Owned Business. O'Melveny & Myers is not an MBE/WBE firm as
reflected in Exhibit D.
RECOMMENDATIONS
The following represent the reccmTendations of County's Debt Advisory
Committee which consisted of the County Auditor, the. Deputy County
Administrator for Capital Projects, and the Deputy Director-Redevelopment.
A. Single-Family Investment Bankers
Staff is recommending Paine Webber, Inc. as Senior Manager and Grigsby
Brandford Powell as Co-Manager. Paine Webber has completed the only
GNMA/FNMA combined financing in the nation to-date. This GNNfA/FMA type of
transaction is most appropriate given the price of new home product in this
County. . Grigsby Brandford Powell is a Minority Business Enterprise located
in San Francisco. They Have Co-Manager experience on the GNMA/FNMA combined
transaction. .
Should the Board wish to consider designation of a second Co-Manager, staff
would reomuend considering Dean Witter Reynolds, Bateman Eichler Hill
Richards, or Kidder Peabody. Information on the sixteen Investment Bankers
responding to the supplemental questionnaire are included as Exhibit A.
B. Single-Family Bond Counsel.
Staff is recommending Orrick, Herrington & Sutcliffe as Bond Counsel, and
Pamela Jue as Co-Bond Counsel. Both firms are located in San Francisco.
Orrick, Herrington & Sutcliffe has acted as Bond Counsel on the only
GNMA/FZ1A financing completed to date. Their proposal was very competitive
from a cost standpoint and- provided for the use of a Co-Counsel at no extra
cost. Pamela Jue is acting as Co-Counsel on a GNMA/FIS transaction
currently under preparation. Exhibit B presents information on the seven
firms responding to the County's supplemental questionnaire.
Memo to: Finance Committee
Internal Operations Camniteee
June 18, 1990
Page 3
C. Multi-Family Investment Bankers.
Staff is recoimne r ing the firm of Newman & Associates to be designated as
Senior Manager, and M.R. Beal as Co-Manager. Newman & Associates is the
preferred Investment Banker by the Developer of the Multi-Family Project to
be financed (See Exhibit E) . M: R. Beal is a Minority Firm based in Los
Angeles that has a fair amount of Multi-Family experience.
D. Multi-Family Bond Counsel.
Staff is rec=mnding the firm of Arnell & Hastie be designated as Bond
Counsel. Arnell & Hastie is located in San Francisco and is a Minority
Business Enterprise. Arnell & Hastie has a significant amount of Multi-Family
experience and presented a very cartpetitively priced proposal. Exhibit C
presents information on the eight firms responding to the County,s
supplemental questionnaire.
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' EXHIBIT D
Page 4 - Mr. Jim Kennedy - June 8, 1990
'feasibility of the project and whether sufficient cash flow
remains to pay debt service on the bonds, if 20% of the net
cash flow goes to the City Redevelopment Agency. However, you
indicate that the financing will be supported by a letter of
credit. Thus, that risk will be assumed by the letter of
credit bank.
B. Costs (Multi-Family)
For an anticipated $10 million bank letter of credit
enhanced transaction, please indicate your
professional fee, plus expenses on a non-contingent
basis. If your fee adjusts by size of the
financing, please specify the formula. Please
indicate whether your fee would be the same or
higher if a co-counsel were designated; if higher,
how .much higher?
We would propose to be compensated for our role as
bond counsel at a fixed fee of $45, 000. In addition, we would
be reimbursed for out-of-pocket expenses incurred in
connection with services rendered. We would expect out-of-
pocket expenses to be about $3 , 000 - $5, 000. Again, the
additional cost for co-counsel is difficult to estimate, but
(assuming a 65-35 split) our best estimate would $10, 000 -
$15., 000.
O'Melveny & Myers does not meet the County' s
requirements of a minority business enterprise or a women
business enterprise. We are, however, proud of our record in
hiring and promoting minorities and women. Enclosed you will
find a graphic study we prepared in 1988 on this issue. You
will note that O'Melveny & Myers, when compared with other
firms who practice in the field of public finance, has a truly
impressive record of affirmative action in its hiring and
promotion practices. In addition, I 'm pleased to say that the
head of the public finance practice in our San Francisco
office is myself, a women.
Very truly yours,
Jan M. Brockman
for O'MELVENY & MYERS
JMB: 1CVs02t00JK
Enclosures
THE JOHN STEWART COMPANY EXH I Bz T:E r.
SAN FRANCISCO SACRAMENTO
June 6, 1990
Mr. Bradley B. James
Senior Vice President
NEWMAN AND ASSOCIATES
1801 California Street
Suite 3700
Denver, CO 80202
Dear Brad,
In response to your letter of May 31, this will confirm the fact that Newman and Associates
has been selected by the IBEX Group as its investment banker for the El Cerrito project.
Best regards,
TH OHN STEWART COMPANY
Jo K. Stewart
Pr sident
cc: Rick Moran, Esq. }
Roger Nelson } The Ibex Group
Jim Babcock }
Peter Wilson }
JKS/cw/0606Newma n&Assoc
2310 MASON STREET. SAN FRANCISCO,CA 94133-1808(415)391-4321 FAX(415)—'196-7579