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Agenda Item
ASR
Control 14-000806 |
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MEETING DATE: |
05/20/14 |
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legal entity taking action: |
Board of Supervisors |
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board of supervisors
district(s): |
5 |
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SUBMITTING
Agency/Department: |
County Executive Office (Approved) |
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Department contact
person(s): |
Suzanne Luster, 714-834-3362 |
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Laurie Sachar, 714-834-6009 |
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Subject: Selection of Financing
Professionals for Proposed CFD Formation & Financing
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ceo CONCUR |
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Clerk of the Board |
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Concur |
N/A |
Discussion |
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3 Votes Board Majority |
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Budgeted: N/A |
Current Year Cost:
N/A |
Annual Cost:
N/A |
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Staffing Impact: No |
# of Positions:
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Sole Source:
No |
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Current Fiscal Year Revenue: N/A
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Prior Board Action: N/A
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RECOMMENDED ACTION(S):
1. Approve selection of Fieldman, Rolapp & Associates to provide financial advisory services for the proposed formation and financing of the Rancho Mission Viejo Community Facilities District known as Esencia.
2. Approve selection of Stradling Yocca Carlson & Rauth to provide bond and disclosure counsel services for the proposed formation and financing of the Rancho Mission Viejo Community Facilities District known as Esencia.
3. Approve selection of Empire Economics to provide market absorption and related services for the proposed formation and financing of the Rancho Mission Viejo Community Facilities District known as Esencia.
4. Authorize the Public Finance Manager to negotiate agreements with the selected firms, and return to the Board for approval of the agreements.
SUMMARY:
The County Executive Office (the “CEO”) requests the Board of Supervisors approve the financing professionals needed for the proposed formation of the Rancho Mission Viejo Community Facilities District (CFD) and potential financing of public facilities and projects.
BACKGROUND INFORMATION:
In November 2004, the Board of Supervisors (the “Board”) approved the Ranch Plan Development Agreement (Development Agreement) between the County of Orange and Rancho Mission Viejo that allows up to 14,000 dwelling units, as well as retail, office, and recreational uses within a development area of approximately 7,700 acres with approximately 15,000 acres retained in open space.
Rancho Mission Viejo has proposed the formation of one or more community facilities districts (CFD) and financing of the public facilities and projects that are required pursuant to the Development Agreement, to be completed in phases, as development occurs.
The County Executive Office received an Infrastructure Finance Program District Application from Rancho Mission Viejo, on behalf of RMV PA2 Development, LLC (the “Developer”), for the proposed formation of a CFD in the project known as Village of Esencia. Esencia is located on 860 acres of hillside land in an unincorporated area of South Orange County east of the new community of Sendero, between the existing master planned communities of Ladera Ranch and Coto de Caza. Esencia is envisioned as a series of neighborhood terraces, trails around a native oak canyon, and a number of shared community recreational amenities. Upon build out, Esencia is planned to contain approximately 2,700 residential units, an apartment community, 525,000 square feet of retail stores, a K-8 school, a daycare facility, and parks, trails and community recreation space.
Phase 1 (the first proposed CFD) covers 464 gross-acres and includes approximately 870 residential units, an affordable housing site, and a K-8 school site. All residential parcels in Phase 1 are under option by home builders. Grading is in process and anticipated to be completed for lot/parcel deliveries to the builders in December 2014. Construction of Cow Camp Road, including a bridge that will provide access to Esencia, will be completed in early 2015. Preliminary estimates indicate that total bond financing for Phase 1 is between $75 and $100 million.
Recommendation of Financial Advisor. A Request for Proposal (RFP) was issued for Financial Advisory (FA) Services for the proposed Rancho Mission Viejo Esencia CFD formation and bond financing. The RFP was distributed to all FA firms on the County’s current panel of qualified consultants approved by the Public Financing Advisory Committee (PFAC) on January 21, 2011, and by the Board of Supervisors on March 10, 2011. In total, nine (9) FA firms were invited to participate in the RFP. Of these, three responded.
A panel was convened to review the RFP responses and make a recommendation to the Board. The review team considered experience and expertise in new CFD formations and financings, availability of principals from the firms that would be assigned to the proposed project from local Southern California regions, and proposed compensation. The review team included one Auditor-Controller Accounting Manager and two County Executive Office Managers. The FA review team recommends Fieldman, Rolapp & Associates as financial advisor to work with County staff, bond/disclosure counsel, market absorption consultant and underwriter in the proposed formation of the CFD and potential bond financing.
Fieldman, Rolapp & Associates is recommended based on the strength of their superior experience and expertise, especially in the last five years and in Orange County. Fieldman, Rolapp & Associates has a long history and knowledge of Orange County real estate, having served as the County’s financial advisor for the formation of Newport Coast, Aliso Viejo, Foothill Ranch, Rancho Santa Margarita, and Ladera Ranch. More recently, Fieldman, Rolapp & Associates was the financial advisor to the City of Irvine in the Great Park development and the Santa Margarita Water District’s formation of Sendero, Phase I of the planned Rancho Mission Viejo. Fieldman, Rolapp & Associates provided the most detailed, thorough example of a Financial Feasibility Report and sample formation and financing line item schedule.
Fieldman, Rolapp & Associates proposed a fee of $58,500, plus a maximum of $1,500 for expenses to serve as financial advisor. The fee includes the preparation of a preliminary and final Financial Feasibility Report; providing advice and assistance with the formation process, including analyzing and reviewing developer financial statements, proposed Market Absorption report, Special Tax Rate and Method of Apportionment; and negotiations with the developer. The fee also includes services for a potential bond financing, which would include recommending a finance plan and structure, coordinating and assisting in the preparation and review of the legal and disclosure documents, coordinating the application and presentation to credit rating agencies, and providing advice and assistance with respect to pricing of bonds. This compares to a fee of $44,500, plus a maximum of $2,225 for expenses from the second RFP respondent, and $44,500, including expenses from the third RFP respondent. Attachment 1 includes the summary group ratings for the three firms that responded to the RFP.
Recommendation of Bond & Disclosure Counsel. A Request for Proposal (RFP) was issued for Bond and Disclosure Counsel (BC) services for the proposed Rancho Mission Viejo Esencia CFD formation and bond financing. The RFP was distributed to all BC firms on the County’s current panel of qualified consultants approved by the PFAC on March 10, 2011, and by the Board of Supervisors on April 5, 2011. In total, twelve (12) BC firms were invited to participate in the RFP. Of these, three responded.
A panel was convened to review the RFP responses and make a recommendation to the Board. The review team considered experience and expertise in new CFD formations and financings, availability of principals from the firms that would be assigned to the proposed project from local Southern California regions, and proposed compensation. The review team included two County Counsel Attorneys and one CEO Manager. The BC review team recommends Stradling Yocca Carlson & Rauth as bond and disclosure counsel to work with County staff, financial advisor, market absorption consultant and underwriter in the proposed formation of the CFD and potential bond financing.
Stradling Yocca Carlson & Rauth proposed a fee of $80,000, plus a maximum of $1,000 for expenses for bond and disclosure counsel services in connection with the proposed CFD financing. This compares to a fee of $95,000, plus $1,500 for expenses from the second RFP respondent, and $311,000, plus a maximum of $4,000 for expenses from the third RFP respondent. Attachment 2 includes the summary group ratings for the three firms that responded to the RFP.
Recommendation of Market Absorption Consultant. A Request for Proposal (RFP) was issued for Market Absorption Consultant (MA) services for the proposed Rancho Mission Viejo Esencia CFD formation and bond financing. The RFP was distributed to seventeen economics consultant firms registered through BidSync (the County’s procurement vender) to do business with the County. Of these, one firm, Empire Economics, Inc. responded.
The CEO recommends Empire Economics, Inc. as market absorption consultant to work with County staff, financial advisor, bond/disclosure counsel, and underwriter to participate in the proposed formation of the CFD and potential bond financing. Empire Economics proposed a fee of $43,000 (which includes a maximum flat rate for Market Absorption Study, Price Point Analysis, and Bond Monitoring Reports), plus a maximum of $2,150 (base cost + 5%) for expenses. Empire Economics has been providing these services to the County over the past five years, and its proposed fees and expenses remain essentially unchanged from the prior five-year contract.
PFAC will take action on the selection of the financing professionals at its meeting of May 8, 2014.
The County Executive Office requests the Board of Supervisors select Fieldman, Rolapp & Associates, as Financial Advisor; select Stradling Yocca Carlson & Rauth, as Bond & Disclosure Counsel; select Empire Economics as market absorption consultant for the proposed formation and potential financing of the CFD for the Esencia project; and authorize the Public Finance Manager to negotiate agreements with the selected firms and return to the Board for approval of the agreements.
FINANCIAL IMPACT:
N/A
STAFFING IMPACT:
N/A
EXHIBIT(S):
Exhibit 1 - Financial Advisor RFP Summary Group Ratings
Exhibit 2 - Bond & Disclosure Counsel RFP Summary Group Ratings