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Home My WebLink AboutSTONE & YOUNGBERG - 1983-01-24 (3) lig n v it J , / Cj JAL-_ 1. i^��•> _ o 4 ....-sp �REQUEST" Pb City CQ NCIL AIPTION RH 84-3 Date �% January 16, 1984 Wbmitted to: Honorable Mayor and City Counci 1 Memb*ers " G� q Submatt )b • Charles W. .Thom son City Admi ni � ��,� �°• p 9 y s °�' r�r fre7red 4y: Specs a'il�Projects::Off`i c Sus ject '` AMEN`NENT.7L'-STO:WE & YOUi GREkG INVESTMENT BV@ji 1N i tKs , �OR 'S.NCLE FAMILY MORTGAGE REVENUE BOND r �xateMent of lssue,Recommendatian;Analysis, Funding Soilred,Alternative Ar.#2.�;,Attachments," L J , it STATEMENT OF ;ISSUE,: „ Since late in 1982, ti-ie City, mai nta,ned a contract with the investment banking"firm of Stone &-Y�%ungberg of.San--Francisco_ This contract is of two parts First, secur•zi,ig f�nanc�al advisor services of the;,firm for tt:e Redevelu;ment.-Agency and second, securing underwriti,,. ervices of the firm A regarriing Si'ngle Family- Mortgage Revenue�gonds. Cur`r.'n' contract secures the s'ei^uj ces For Single Family Mortgage Revenue.Bonds of �L.ii:;e & Youngberg, as t` co-underwriters with Merrill Lynch, Whiteweld: Capital Marketings' Group. Since ?t .is no longer necessary to secure the services of Merrill Lynch, the proposed amendment to the-. previous agreement eliminates reference to this firm. J RE`COMMENDATION: Approve and authorize the City Clerk to execute the attached amendment agreement, designating the firm of Stone &_,Youngber a's the sole underwriter:'s for the iA ty's fut�`.,..e Single Fam�Jy Mortgage Revenue Bond financii-+gs. '1 � � CI ANALYSIS•" When the City sc+7 i ci tied proposals for firms to provide'underwriting services for single farnily mortgage hevenue bond;Stone & Youngberg submitted a proposal to p s insconjunction with Merrill Lynch. After,,analysis of this rovosa.land interviews Britt:2representati`ves of these;firms, the City selected P p the firin`'of Stone & Youngberg +6'provide such. services. At this time, this, >' , arr nge�ia►}t o ro =�¢e Opp,�nc�erwrilti ng' services between Stone & Youngbet'8 ,►i:9 Met' a,ll L +nch7? s been rai pd,. Ing,'addi ti on, It is the opinizri:��pf, stiff that = 'se'cibong th(i e,- ces of bn,� firms far single-family mortgage revenJue bend issues -�is,`no 1onge�;nec�ssar�y.. Ther�� re, c, a-if recomme�tds adoption of the attached e �' ariinnde •contract,-=sti�u`lating Shone &,"oungberg as sole underwriters' for any fiturf: sirgl e�f�ast+i ly mortgage revenue.`wind issues FUNDIPG:,,SO*E.!f Underwriter `ees a.te paid °frcm band proceeds; no budget impact. �1 _ _r a !} \ �6 i y 'J1� k.r '�• � t;,V� r'• _ it ,,.. RM 84-3 �` d ��c� ry 6, 2984: x, o ALTERNATIVES:,, 1.� D6 not approve the' prop;fed amended contract. a. " Maintain the current agreement; stipulating"`tone & Youngberg and Mrrj I Lynch, as co-underwriters for single-familymortgage revenue ATTACHMEN, TS: _ 1. E�ided 'con tac " R' ' �F a JT Al Qk gt 31 }1 n y v _ d ,l 41 r Stone u l 'teber r MEMBERS: kCIFIC STOCK EXCHANGE ! �! 't Janual"y 42 1,984 city Council city of Huntingt6m .each r II V. Q. Box 190 =` Huntingtoj,:Bea&,r; Cat ,9 €►i f,, �. Attn: Nlre Stephen N. kjqhise, Housing and Cok,,.inity pevelo spent ,:Department_. Subject: Undo t txrg Agre'�tent for'Single Family-NMortgage Revenue Bands tfonorablp.. Courlcfil Nienbers: This letter will_'serve at;"an,agreement between .the City of Huntington Beach � ifid Stone &' Youngberg to serve,,as Managing Underwriter,to the City until the parties tinter' into anz actual Purdkase"Contract-regard"ing the n 'gotr�,jted sale of single family idrtgago revenue bonds to b�� issued by the, City (the � "Bonds ). �Thi� underwriting,agreement :supersedes.and repi,aoes the k underwriting agreement entered into on JanuarV_71, 1983 between the City and Stone & Youngberg and Merrill "Lynch White Meld Caipital Markets,Grourodated November 11`2 7982 Vou have informed us that tre City intends to issue the Bonds and provide ;c? Bands for mortgages on single-family residences for projectCto-be built by a various deyelooers and for this purpose requires the seFvices of a Man c�,i1-ig [ Underwrifter to structure the financing and to enter into a Purchase Contract. With tNe Cl.t-to purchase the Bonds through a negotiated price that is ' agreeable,,to both-parties. "4��inaal>n� Urrder�dv°�ter; we will use our utmost effarts to>~ra`isefunds at .the most rtasoOi6le gates' attaira�bU Jn #e market under then ex;'sting fat�agirag . ote d City-and,te ' te,onf K underwrter,,.Stone & You» b take ,the below. TistMa servc4s ant functions. fA. t r ucte j hg thy;Financirr�s. i.t As Hanaging'Undarwr ter to the`City, we WiT1 work; with your staff in - designifig the scope o "a,n ieconbigic feasibility s ketatk udy addr6ssing the 1, i # y of, projecis and their projected cash flow. - We.,will a�$oFass Ist the City in the teview`a'd asap a icatiop of,-, 4ihe study's. The Man i>r�g Und 'if•�a 64l,l work''with the City°s bond-counsel,, �i Jones Hall N19 & gh'ie3 In .�eclnmendi`ng specific termsaatl ®at itiorsra'fectiv,!' the bas1�� security of the Bonds. \� ONE CALIF9PNIA'STRECT. SUITE 600 SAN FRANCISiQ, CALIFQRNIA 94111 ,(415)981 1314 - � ,r 1'MF>mlli'ih1111 } 4Y City Council �Ity of Huntington Beach 1 ;� =danpary 4� 1g$4 « �� h L Page 3, The Managing Underwriter 4fll assist the fity `in selecting a;,maj'or- banking firm to serve ast~rustee for the, mortgage lending,programt. We, will assist boWi counsel in preparing 4: Tist of services required of the trustee, 4 The Managing Underwriter will assist the City, acid developers in electny"quaTiffied mortgage lenders to originate and service the mortgage loans. The 14anag=:ng Underwriter will assist the,'City define "the rules and regulations to be adopted.,by the City that prescribe { ndards by which mortgages. are purchased 'and serviced. 5e T'h'6 kanaginq Utderwriter'wi1T pre0are detailed mortgage originating anal, scra�icing guides that define specific procedures for selecting Oligibi7e mor�-igages and,mortgagors and set forth reporting requirements for the servicing of..su6 loans. 6. The Ad' nag ing`l3nderwriter;wi 71 direct a .east fi, w anaTys'is that"' evaluates the rpyenue derived from the mortgage loans, including prepayments and penaltie!: end determines the optimum maturity structure based on market-O'bd'itions and security provisions and rec Amends an investment progratm.;;:o maximize yield on investable ,r- r funds. �.` 7: The Managing Underwriter will prepare 'the teat of a bond prospectus for sale of the Securit>ies. Such pr-osocctus VAll include a description of the bonds and(thei"r' security ,.the partied to the agIreements,, the projects, the:-mortgage lending program, an,,pertinent financial and economic data. In preAaratioi ofs,uch prospectus we will exiftise due >diligences in the ascertainment o �1T material facts and circumstances regarding the project and` leir disclosure r a in the prospectus.' 8. The Managing Underwriter will contact one or more rating agencies and frovide them-with sufficient information to obtain a,rating on the onds prior to their sale, 9.. Tiie`=planaging Underwritar will represent the' City at any necessary in ormatio -meeting or meetings. (Depending upon the resultsof the lasibilitistudy w;dlor the status of the municipal bond markets� such mietin9 s-may or may not be�,nPcessaryd) B. Mrket3the Bandy 1. The Managing U:ndevwriter 011 use its=best efforts t` accomplish th ' formal marketing of'the Bonds which ;should-be accompltlshed at the „ earliest dates. possitiblO consistent with sound investment banking—grad underwritinfprinciples it is}' tended that, once purchased by the Managing'`Ur�Kerwriter,;the Bands 0 71>be re-offere:d`to the ,public on the basis off s� immediate bona fide nubli.c offering`". y7he Managing uFdarwriter gray far;`n a group of investmen�: barking firms fit''the 0,*,se of underwriting and selling�the Bonds. City, Coin?1 T±ity of Huntington Beach January 4, 1984 .; i Page S f --2. At the designated time fa sale of the Bonds, the Managing Underwriter will 'suamit an offer to the City to purchase the Bonds, subject to pertinent resolutions, the Official Statement, a minimum rating,of ,investment ,grade (Paa or BBB) by either Moody's Investors Service and/or Standard & Poor's Corporation, and all other necessary documents, approvals, and proceediEge governing such Bolds having been determined by bond counsel, the City,.-and the Manaitgg Underwriter to be satisfactory in all respects for,finant-ing purposes. 3. 4t least one day prior to the submission of any-`su::h formal offer to the City for, the Vrchasi% of;, the Bonds, the Managing Underwriter,.,will indicate to the City thWinterest rate or, rates, the purchase price from the::--City, and public offering` price off the Bonds which we`'#hen estimate will'be-incTuded in such offer. �- C. General_ Provisions Relati alto the" City and the Managing Underwriter:, 1. 4The City agrees to:md?:e available to the Managing Underwriter withuut ,cost ssffi;,iet copies of the economic and other reports, agreements, contracts, resolutions, Preliminary and Final Official Statements, and-other--relevant documents pertaining to the pro3bcts, the City, or `pie bonds a;-rsasonably may, be required from time to time for the s ° /prompt and efficient performance by the Managing Underwriter of its obligations hereunder. _ The ManagJng...Underwriter shall pay its own out-of-pocket and other expenses,; the cost of-Blue Sky and Investment Memoranda used by the Underwrf rs and —11 advertising expenses in connection with the : $ public offeringcof 6e Bonds. 30 The City'sha11 pay fr��m''the proceeds of the Uonds or other,-.funds �£. the''City all costs end expenses customarily paid therefrom, including i , -the cost Hof printing the b�;nds, Official Statements and other Baca-ments,' the fees and expenses of.?'*•,a legal counsel, bond counsel, - Special tag; counsel, consultants, accountants, rat 4 ti'g servi,cas," and of any other ,experts` r�±a inpd i,y the City in connection with"the . y _ • •i y �� , fina�tcing. ''. r 4. �It is expressly understood and agreed, and tt:e City hereby reLognizes ( that. in performing its artiuities pursuant toa-negoti'atad sa,e that 3' 1, the Managing llnderwrite 5 act on iYsir own behalf as the ` ,.. prosper-V 6 manager ,of ih, underwriting gra.up�� ich "'Mans to uhmit to the City a proposal to purchase the bonds for resale fdrath,ng:here`yn =shal'?,,be construed 6 maE:7' 6e Nfanagtnq Underwriter an employee or financial; fiscal:,, dr other advisor of" the City:,with respect to the single-familymortgage relwoe bond INsue, or to establish any "? fiduciary relatioeiih p between the City and the Managing�;,' � Underwriter, ;It,, is understood that Stone & Youngberg may serve as fi,nan61a�l_ ar,vlsoP to the City,or:its-_redevelopmena agency on'other - r_� _typesof,-public financing. u; c .w City Council City of Hunt ton Ueac`h January 4,, 19S� R, a. This agreement shall extend to the date of sale of thf Bonds as contemplated herein, when the formal bond Purchase Contract_:is entered into bi the parties. 60 The C'1t ;na' terminate his a reemert at any time on or of �� y �',. 9 ter the ilast °day of December, 1984, following receipt by the Managing ? = Underwriter of written notificaion frum,;che City. 7.' Upon,190mination ;of this agreeme-fit, the Ci�Y shall be order no f"rtke7v obligation to the Managing.Underwriter hereunder, except that the 0ty is:cbfigated to pay to, the Managing ider+wiiter any expenses. ippurred on behalf of the. City pursuant to Paragraph. L;.(3) of this.- 0 uld the City not sell the bonds to the Managing 7dp;derwriter on behalf of the Underwriter pursuant to Se_cti'6n=t of this a4�eemento c Upon your atceptonce:set forth below, this letter will constitute an agreement beiween the City and the undersigned. , STONE & YOUNG G �' By Accepted'this' ' day of - ' 1904 CITY QF- HUI IM4471EACH ATTEST° IpAlXny /�t - _ - < m i 7 er. May .._ APPROVED AS TO f604: INITIATED AND .APPR9VED AS TO CONTENT. L t By ebd�VB us i Hess and vv n, us r al " % Enterprise s �. n -APPROVED: - By - - fty mns ►•aor -l „ Z V Ikup a YS a fl ,'EMBERS: PACIFIC STOCK^tEXCHANGE J January 1% 1983 0 Stephen V.' Kohler Senior Community Development Speci al„st Hrl�sing and<Community Development- P.`Q. Box 490" Huntington Beach, CA 92648 Dear Stephen: ° = t your, request ; "and`as you and Scott discussed today, Ihave shown below a proposed schedule of events leading `up to the delivery'-of the City's„ r,esidlent-iai mortgage revenue'` bonds. We believe this schedulewill provide s u f f 1`cf(M"'t time for all participants to review and comment on the financing de;,�eTents prjor to the` Standard & Poor''s site visit now scheduled for ,February 16. Gate Event ,1 January 28 " Distribute financing documents. i'e�rU', C3 "ary 2 l ,' Documents review�� session in Hunt,i.ngton Beach. Developers, and the lenders recommended by developers, should also be`'present to review the Developer Agreement and Sales and Servicing Agreement. 7 City Council pass resolution giving conceptual - approval to Urban West Communities project. Standard & Poor's -site visit. Target date for Standard & Poor's:, rating. Strategy sP sion�with developers. Deadline for developers to'Ysi.gn Developer-Agreement ands: deposit adds,��iorial fees (approximately4- points).� u _ i11 14, I arch`P 1: Print and.d�strib'Ste preliminai; official , -statement.: y Pricing, and marketing of bonds. _ 14/r "' City LounciVapprove Purchase Contract: i ' 4 Bel iVer bonds and btJnd proceeds. <: ( ONE.GALI6ii�1A STREET.SUITE Z90,0 • SAN F,RANCISCO. CALIFORNIA 94 11 1 1415)98 1.13 i 4 :r. ;-a t.;_- _ .. ,. •fir. :, .. ,l t ' 17 � CITY OF HUHTINGTON, BEACH A = COUNCIL'- ADMINISTRATOR COMMUNICATION IIUVT tiGt0%HERE It - ,,To Mayor Bob Mandie and Gouncil'members From Charles W. Thompson City Administrator Subject UPDATE ON PROGRESS TOWARD SINGLE= Date uanuary 17, 1983 FAMILY MORTGAGE REVENUE-80ND ISSUE I , 0 1983 I would like to take this opportunity t0 bring the Councilmembers'"yip-too-date regard- ing the staff's°pCogress on the'Single=,Nmily Mortgage Revenue Bond Issue of 1983. 1._ Three levelopers�.have expressed interest inparticipating in the Sing°r5-Fam�' � G� Mortgage„Revenue' Bond Issue •in sufficient dollar amounts to fully suhscri.be a' the C,,ty's- anticipated entifiee�ent amount from-the Mortgage Bond All6cation j Comm�tt�e"of $2a`million. These eveTcipers are: � ' = av, UrLniWest Communities' i) 3030 South Bundy Drive `Lo,5 Angeles, California 90066 Dollar„Amount - $15,503,84.0 . _ (UrbanWest' Communities wi 11}�be a Joint venture'partnership with the 1H u nd hg ton Beach Coitipany, and the proje+ upon which ;.bond"proceeds will be used' fs. he Ranch.") b)0 Woodtrfe Developt'e-t Company (in cr;niuhA-1 n with Citadel Service Corporation) 1665 Plaeentia Avenue Costu''Mesa, `California 9262 4 Dollar A.rnount - $3,100,800r The pmin-+ to "be financed `with. bona prac;eeds is located in the Talbert'-Beach Redev!r '-,..Project`A �� c) Lindbo 17220 ``treet Founta,V' California 912708 j = Thef;the bond 1 ssya will be used by this developer to` finance L< siny fines on the eas�t-side of Lake street between Hartford and Fran °2. In order�16 ,gain din the Ci ty`s current ,positimn on the State's waiting list for �t an, al 1 ocat6r,, which wi,1 au-thori ze the City to sell single-family-, bonds', it is ne�&essa6) to certify to ;he:sate reczi pt .frem, the parti ci pati ng developers, z� .,of a 1-ettgr of -credit-ir an."amount equal to One--half of one perc2nt ..o'r thp,rvtal amEtiuni, i;;f finanicing desired by each developer. „The State has estai3-��ned Friday, danuary '219 19P3 as the deiadline� by wh �c the City :Admintstrat6n.,'must certify receipt of such letters df credit. To accmm oda'te this-State deadline, staff «. has requLted the„above referenced developers to submit letters of credit to ,the City b�+ 12:00 Noon on Wedne day, J'anuary� 19, 19P3. (.. : Mayor-Mandic and Counci1,10")bers January 17, 1983 ',Page Two ,- A: , 3. 'It is ;im Pbrtant to note that participa-eing developers are placing this one-half of one, percent letter of credit at risk on, January 19. State Law requi ^es that, should. the :City be unable to suc'cgssfully prepare and sell the bond issue, the ;> developers will forfei -the deposit- represented by_the letters of credit. 4. The City Cgpncil has stated its intention; by Resolution No. 51,55 (see attached), to participate in a Single-Family Mortgage Revenue Bond Issue during 1983, and it is upon the authority of tFr"is resolution that staff submitted -the application to the State's Mortgage Rond Allocation CorKlittee which is now pending. QUESTION'FOR COUNCIL Since, in the immediate future, the City will be asking participating developers to pace their own funds ,at risk for the opportunity to participate in a future single-family mortgage revenue bond issue, it is iappropriate at this Lima for the Council to reaffirm this expres— �,.. sio'n of interest iri partcipatrna in such a bend. issue, Obviously;, it is % t/J not the staff's intention to accent,developers' letters°of credit if the ourrcil is not in concurrence succeeding actions that will be necessary to fully prepare. and sell a single-family bond issue. 6, If there are extenuating circumstances which prevent the City in selling a bond issue after accepting letters of credit frcn-the developers and receiving an allocation from the Mortgage Bond Allocation Committee, then the amounts -In i-11 ded in the developers' letters 'of credit will accrue to the City and, by State Law, are stipulated for, use only to improve housing opportunities far "4 1c* and moderate income households. 6.,: The schedule for the subsequent actions regarding preparation and sale of the bond issue: is attached for the Council's consideration. it - I; hope that this information will be of assistance in keeping the Councilmemb'ers awarie of staffs actions as we move forward in the preparation of the Single-Family Mortgage Revenue Bond Issue of 1983. TT.SVK:jb ° attachment r ,j � u�. 4`. 5�, ,a �� ✓ ,I •ill �' � �' .. .. t L 100) , THE CITY OF HUNTINGTO.N BEACH -- SINGLE-FAMILY MORTGAGE REVENUE BOND PROGRAM SCHEDULE January 19, 1983 Receive letters of credit from the developers �lanuary 21, �;83' The State accepts the City Administrator's certification that the letters of cr�ed'it have been received totaling the City's full entitle- ment rei6 st of $20 million in State allocation. January' 28, 1983 Standard and Poor's (the official bond rating _ agency) visits sites of developers to be financed with bdnd proci�?eds and conducts tour, of theme Clty. February' 7; 1983 Mortgage Bond Allocation Committee mee'ts ,to approve , (week of) allocations for all Tocal'jurisdi:cti.ons including`-' anticipated $20, million. allocation for the City of Huntington Beach. r Mardi 1 . 1983 Approximate date of sal,;-of the bond issue. 1 April 1, 1983 Approximate date;, issue closes and bond,'pr� .ls are available. a (i 44 41 "RESOLUTION NO. 5155 -A RESOLUTION OF ^THE' CITY COUNCIL OF THE CITY OF --- HUNTINGTON <BEACH STATING ITS INTENTION TO ISSUE MORTGAGE REVENUE.BONDS Ij WHEREAS, the Legislature of the State of California has authorized cities and redevelopment age'nc 'es to make long-term, low-interest loans through qualified mortgage lenders to finance residential construction, rehabilitation, and resale off existing housing stock �ithin the local ,jurisdiction; and The Legislature; in Health and Safety Code Sections 52000 et seq. ,,-'has esta- blished parameters by which a city may issue mortgage bonds for the-purpose of financing such construction, rehabilitation and ,resale; and The City of -Huntington Beach (the "CITY") believes that it is in its best interest to Utilize mortgage revenue bonds to increase the Supply of housing in, -Huntington Beach and Expanding housing opportunitie$ through the issuance of mortgage revenue bonds is� a valid,publ c purpose, and , In order to issue the bonds successfully, the City requires the advice':of Q quaTified ,investment 'bankers and bond counsel NOW, THEREFORE', BE IV RESOLVED'by the City C unci l of the City of Huntington Beach` that; < j,,y It hereby approves and authorizes the issuance of..mortgage revenue bn'nds, i{ pursuant to Health and Safety Code Sections., 5200& et seq.; in an amount not to exceed $20 000,000. _ -r Z. The bonds will be payable solely, out of revenues andother amounts derived by the City or its.Redevelopment Agency (the' --AGENCY") froni mortgage loans, the funds in the debt service reserve fund, and other funds and accounts created by, , the trust indenture establishing' the program and the earnings thereon. The bonds will not be a geheral or moral ,obligation of the City or Agency within the"meaning of any constitutional or statutory provisions nor a charge agaiiivst. its general credit.. . . 3. Neither the members of the City Counc'iI Redevelopment Agency, nor any official or employee of the City, nor any person executing ;the bonds- issued under „y the program, shall be liable personally on the bonds or be subject to any persrnal liability"of a.ccountability`by reason of the issuance thereof.' {S 4. It is hereby found and de"termi-,led that tie issuance of such bonds isa valid and lawful public purpose.` 5. Bond proceeds-shall be usedfor either, one, two, or all of,the foIIow- ing purposes: sd e`'0f newly constructed re'sidennces,, sale, of :ex(istin' homes, or 61 substantial rehabilitation of existing rEsidenc_s r. '. 6. ,Che Ci ty Admi n i strator,,i�5 au 4hori ze�i and"directed.to submit to the rl,Jort0-9e1Bond' .Allocation Committee an applicatr�c)n ;of. the purpose for which bond's *; 'are proposed to be issued'and the amount of the proposed issue, and to take , further actions os are required-'to prepare a mortgage bond issue and program. ' - f P:gSSED AND AMPUD 6 the Ci tyy Counc i l of the City of Huntington Beach at a regular meeting thereof held on the 7th day of September 1982, _ °ATTEST: _,ti-ty Clerk., Mayor REVLEWED AND APPROVED: APPROVED) AS;,TO FORM: �,,,4e_I j` City Ad--inistra 6r City Attorney s INTIATED ANC>APPROVED: ;.Direcf r,_Business and Industrial Enterprise 5j 1 - -2- n< 7, r �._. REQUES� F0, R CITY COUNCILACT19' /,4`7 -4 November,24, 1982 Date &ibrnitted to: Honorable Mayor and City Council Members -� ---�—� y ,A PROVED Z CO!;NC%L Subanitt by: Charles-W. Thompson, City Admi ni strator'� o �Y9-0 Prepared by. ffice of Business and Industrial Enterpris Subject; APPROVAL OF CONTRACTS WITH INVESTMENT, BANICEE EXEMPT FINANCINGS: STONE AND YOUNGBERu AND MERRILL LYNCH f, ,taument of Issue,Readrrur endation,Ana"ysis,Funding Source,Alternative Actions,,.Attachments: STATEMENT'OF ISSUE: At its regular adjourned meeting of Monday_, November 15, 1982, the City ,Council selected the fi rBc:;:,of Stone end YAoungber-g and Merrill i Lynch to serve as co-managers for the City's r. J,�uture`"siogle-family Rpgtgage=reyenue bond f`:nancirg, and the fiti-m of Stone and Youngberg ' to;servi as chief-underwriter and financial advisor for all other tax exempt financings Alb-at teat timer> Council Authorized ;;staff to negotiate contracts with these firms and attached foe the, Council,'s consideration at this time,are such contracts. RECOMMENDATION: Approve and authorize the City Clerk to execute: Underwr�,, i'ng Agreement with Stone and Youngberg%Merrill Lynch White Weld Capital Markets Group for single-family mortgage revenue bonds. 2. Underwriting Agreement with Stone and Youngberg for m0 ti-famiTy= rnortgage revenue bonds. ANALYSIS, Pursuant to the- r.,juncil's authorization of Monday, NovembeN� 5, ,1982, staff requested the firms,.of Stone:'and-Youngberg/Merrill Lynch et al to. pr"'epare •graft contracts to provide the services of investmerts banker/underwriter for the City!, : future tax exempt„financings , ,"Such contracts were prepared by these firms and received on-Friday, November 12, 1982`- and subsequeiftly,,forwarded to the City Attorney' office for review and approval. Because the nature of'the services to be provided by these firms and the nature of the specific . tax exempt financings to be undertaken are diverse, two contracts are necessary; specifi- cally: firm of Stone and Youngberg wi"11 act`'as senior manager a"1,id,Merrill Lynch 1 will co-manage any single-family tax exempt mortgage revenue bands which the :.> City `might 'issue and the first contract is to secure these firms' services.for `this purpose. 2. . Stone and Yojingb,yrg will act 'ins senior manager for any multi-famirly tax exempt,. revenue bonds which the City might issue and the second contract ,is to sec"',•e the' firm's services 'for this purpose:" It is a1�o important to., note that all fees and expenses of both Stone and Youngberg and Merrill _Lynch are paid "solely out of bond proceeds and-no expenditure of City funds will be required to retain,u.he services of ,these firm;;., Since these firms operate on. .a "contingent fee"basis, feFs'and expenses are only paid if, indeed', bonds are sold. This provides the City the opportunity to garner the highly qualified services of 'these firms to<,negotiate with developers and, structure°such issues without i'ncur•- mpg costs. J, However, while the fees and expenses of the underwriting firm are payable solely outi 0 ..bond proceeds,,-the City could be liable for the payment of certain costs of issuance should a ''4�)nd issue be prepared but not sold; specifically, costs charged for the services of a rating agency, a feasibility study, and bond print- 'd irq', as well as any out of state travel whichmight be required by City staff. It is important to notL`', however, that the agreements between any developer to benefit from the 'financing and the City will be in place prior to incurring any of these expenses, and such developer agreements will require developer contri- butions to cover such costs should the bond issue be-cancelled prior to sale. Therefore, awhile the, City would>be liable for payment of these costs should an issue be cancelled immediately prior'to sale, the City would have the <<Jsurance. of funding from an outside sourr4: ,through the developers to cover s6th `costs. To assure the City the-maximum flexibility of structuring and timing of any tax exempt financings which might be undertaken, it may also be desirable from time 'to time to enter into similar agreements` to garner the services of other investment banker/L"knderwriter firms. In the future, as was pointed out to the Council at the time-of the selection of the Stone & Youngberg/Merrill Lynch firms, should it be- come evident that so1`ne'additional firm(s) may have unique qualifications for one ;specific tax exempt financing, staff will forward to the City Council a reconunen- dation to contract with such a firm on a one-time cf`ly basis or to recommend that some additional firm(s) "co-manage" with the. Stone & Youngberg firm. Also attached for the City Council' information is a schedule as prepared by Stone & Youngberg for the consummation of the single-family bond financing pro- gram for this calendar year. The remaining steps in this financing may be sum pro- ...gram as follows: The State of California,;;s Mortgage Bond Allocation Committee will certify the City's position on the allocation list on Friday, January 2,1, 1983. Following this certification (which will hold the City's position on vhe State's alloca- tion list), a feasibility consuitant`rwill commence work on a study to document the marketability and d6iiand for the new construction housing units to'-!-, produced.,,=,;nd financed with bond proceeds. This information, along with' the proposed structure of the fin«�,cing, will be 'presented to the bond rating agency;,.(Standard & Poor's) when that agency visits the City on, February 16, 1983. Folloyving =ghat:site visit, Standard & Poor"s , rating committee will meet and issue ;:the actual ratir�= ";r the bonds on, ` approximately Ff,:,ruary 25. Following receipt of this rating, the Stone & Youngberg firm and City staff will meet with developers in a final strategy sessionto review the financing docu- ments and, at this time; developers will be required to post the additional fees required for participation (approximately,,4 percent). March 1 is the target date-for the printing and distribution of the preliminary Official. Statement, and the bonds will be preliminarily priced and marketed :. March 3 fit: It will be necessary to have a special City Council meeting on i March 14 so that the City may approve all of the f�nancing documents and the purchasle 6#ract. Bonds and bond proceeds wi 1 l b i� deA i vered March '24, 1983. ,. "'. The:Ci ty�'may terminate this agreement at any time efft- ti,ve 30 days following notice to the Managing Underwriters. " 'ALTERNATIVE ACTIONSrz, Reer,th(), attached contracts back to eff for further review. FUNDING SOURCE: All fees and expenses of both firms will be paid solely out of bond proceeds or_) develoF�\r rontribut ons= no expenditure of City funds is requ,:red. ATTACHMENTS: erbiri to nay eements posed Sce;t'� 7 a of Events C( T•S4'K:jb 1, �I x - r� a l .d'. h. STONE & YOUNGBERG MEMBERS: 'PACIFTC�STOCK EXCHANGE November 11, 1982 0 City Council = City of Huntington Beach P. Uo Box 190 Huntington Beach CA 92648 Attn: Mr:` V. Kohle "Housing and Community Development Department Sab�ect� Underwriting Agreement "or Multi° Family Mortgage Revenue Bonds Hdhbra6le_CouniiI Members: I ' This letter wi11 serve as an agreement between ¢ae City of Huntington Beach and Stone VYoun�ti er ,to serve as Managing Underwriter to the City until)-the � <r ,� g�, g 9 y, parties enter into an actual Purchase Contract regarding the negotiated sale of multi-family mortgage revenue bonds to be issued by-the City (the "Bands"). You have informed us that the City intends 'to issuc>the Bonds and provide > == fupds for mortgages on multi-family residences for projects to be built by- ' various developers and for this purpose;requires the services of a Managing Underwriter to' structure the financing and to enter Jnto a Purchase Contract � %= with the City to purchase the Bonds through a negotiated price that is } 1 agreeably Ito both parties. nderwriter, we will use our utmost efforts toraise fund mat the As Mana4ingU aF� most reasonable rates attainable in the market under- then exiling condi;tiorrs. In amplification of the understanding between the City and the Managing Underwriter, Stone &,Youngberg agrees to undertake the below listed = services;,and functions. Structuring the F'inaacings: is As\\�Ianaging Underwriter to the City, will work with your;staff °in � des,g\qing the scope of an economic feasibility study addressing the ;. marketabi l a'= .�%,of the projects and their.prelected cash flow.' We will , also assist the City in 'the review and application of the study's' results. 2. TheeManaging Underwriter will work with the City's bond counsel, rt Jones Hall Niii &White, in recommending specific terms and " f conditions affecting the`'basic security of the Bonds; & ' The Managing Underwriter will assist the City in selecting a major banking firm to serve as trustee for the mortgage lending programs. y We will assist bond counsel in preparing a list of services rp- uiled of the trustee." `iF ONE CALIFORNIA STREET,.SUITE''28oQ SAN`FRANCISCO.CALIFORNIA 94111 (415)981-1314 Was _i City Gouncfl Ci tty of Huntington BieAch November rl, ,i902 ' Page:2 4. The Managing-Inderwriter will assist the City and developers in selecting qualified; lenders to originate and service the mortgage loans. The Managing Underwriters will assist the City define the rules and reg6latiorVs tv be adopted by the City that prescribe standards by which mortgages,.are purchased, and serviced. �5. The Maraaing Underwriter../,will'work with developers in selecting Il lenders to" act as'credit`enhancers on the multi-fami lii)ondsL lie l will `iorkyith the City and developers in regotiating qualiffnat-i:on criteriA, and ioar'f-ter-lender structures that accomplish the City's financings. " f ;i - s, 6. Tte,Managing underwriter will direct a cash flow analysis that " evaluates the revenue derived from the mortgage loans, including _,prepayments-and penalties, and determines the optimuir, maturity structure based on marKet conds'tions and security provisions and recammends an investment program to maximize yield on investable funds., d..� The Managing underwrifi.ir will prepare the text of a bond prospectus for sale of the securities. .Such prospectus will include a description of the bonds and their security, the parties to th`c agreements, the projects, the mortgage lerding;;progeam, and pertinent financial and economic data. In preparation of such prospectus we " will exerci-z due diligences in the 4scertainment of all material f 6ts and C'frcuastances regarding the project and in their disc°--sure A;In-the prospectus. 8. The Managing underwriter will contact one or more rating agencies and K, provide ,them with sufficient information to obtain a rating on the rbonds prior to their sale. 9. The Managing Underwriter will represent the City,; at any necessary Information meeting or meetings. (Depending upon the results of the 11 feasibility study and/or the status of thc-+unicipai bond Market, �! such meetings"may_or may not be necessary.) B. Marketing the Bonds: 1'. The Managing Underwriter will use :its best efforts to accomplish i�ne formal marketing of the Bonds which should be accomplished at the earliest dates possible consistent witiz,.:uund investment banking and underwriting principles., ,At is intended that, once purchased by the Managing Underwriter, the Bonds wild be re-;,offered to the'Public on the basis of an imrmediate ++bona fide publii offering,,. The Managing Underwrit6rs,may form a, group�,)of investment banking farms for the purpose of underwriting and selling th' Bpnds. r i Q� � �r C ` j City Council City of. Huntington Beach S November 11, 1982 Page' 3 . - At the designated time fo;r sale of the Bonds, the Mar.;agi ng c Underwriter wflI submit an offer to the City""to, purchase tha Boftds,.. a subject to pertinent' resolutions, the Official Statement, a minftium rating of investment grade (Baa or BBB) by either Moody's Investors Service and/or,Standard & Poor's Corporation, and all other necessary documents,. appr'dvals, and 'proceedings governing such Bonds having been determined by bond counsel , the City, and. the Managing Under- writer to be satisfactory in all ,respectt fo`i^ financing 'purposes. 3. At least one day prior to the submission of any such ,formal offer to the City for the purchase of the,.Bonds, the Managing•',Underwriter will. i'ndi'cate,,to the City the interest rate or rates, the purchase price from the Oty, and public offering price of the Bonds which we then estimate will bq, ncluded in such offer. C. General Provisions Relating-to the City and the Managing .Underwriter: 1., The City agrees to make available to the Managing Underwriter without colt sufficient copies of the economic and other reports, agreements, cantr� its, resolutions; Preliminary and Final Offici"al Statements, ' and oiner relevant documents ,p'ertaining to the projects, the City, or the bonds as reasonably- ay 6e required from time to time for the prompt and efficient performllnce by the Managing Underwriter of its. ob--�Igations hereunder. }r 2. The Manag�n9 Underwriter shall pay its own out of-pocket and other expensis, ,the cow-'". of Blue Sky and Investment Memoranda used by the 'Underwriters ana, z l `advertising expenses in connection with' the public-offering of the Bonds:l ;. 3. The City shall pay from the-proceeds of the Bonds or other funds of the City all costs and expenses customarily paid therefrom,;; including the cost of,printing the bonds, ;Official Statements and other documents, the' fees and expenses' of its legal counsel , bond counsel , spcciai tax counsel , consultants, accountants,; rating„ services, and: of any other 4 ` experts reta�:ied 'by the City in connection with the financing. Stone & >> Youngberg shall not incur any obligations or expenses for which 'City is responsible without pri,,r 'written consent of City. 4. It is;.,expressly understood and agreed, and the City hereby recognizes y that in performing its activities pursuant. to a negotiated sale that the Managing Underwriter is acting solely on its own behalf as the prospective'1 anager of an underwriting group which plans to submit to- the City a poposal to purchase the bonds for resale. Nothing,lpe eid �1 shall be cori`strued to make the Managing .Underwriter an employee or i nam;cial fiscal, or other advisor of the City with respect to the f multifany mortgage revenue bond issue, or-� establish any fiduciary relations��p between the City and the;Managing Underwriter. It is under too -that Stone ,& Youngberg may serve as financial advisor'to the City or its redevelopment agency on other types of public financing. r " k:,,, city Council City of Huntington Beach November 11, 19E2 •. Page 4 >„ 5., This i?.Agreemn*=hall extend to the date of sale of the Bonds as contem- platea� herein, when formal bond Purchase Contracts at'e eny*,ered into by, the parties. b. The Cityfmay terminate this Agreement at any time effective 30 days following written notice to Managingg Underwriter from the City. 7. Stone & Youngberg' shall defend, indemnify and hold harmless City,f;its officers, agents and employees', from and against any and all-11NN-oil ity, judgments,,'damages, costs, lcsses, claims, including Workers' Compensa- tZdn claims, and expenses resulting from or connected with Stone & Youngb"erg's negligence or other tortious ,Londuct in the performance ` c of t�i`is agreement. upon terminatiop of this agreement, the City shall be under no further (( obli6tion°to the Managing Underwriter hereunder, except that the City is obligated to pay to the Managing Underwriter any expenses incurred on 'behal_f, of the City pursuant to Paragraph C(3) of this agreement should the Cit�.not sell the bonds to the Managing Underwriter on behalf of the Und kiriters pursuant to Section B of this agreement. Upon your acceptance set forth below, th 's letter will onstitute...an agree- spent between the City and the undersigned. °. STONE & YOU BrERG , , _ BytI/ Accepted this &ix_ day ofi Qdn,u 3983. CITY OF HUNT NGTON BEACH ATTEST: City Cl r'k - Mayor APPROVED AS TO 60RN:' INITIATED AND APPROVED.AS TO CONTENT: City Attorney Director, Business and. Ind,►astrial G Epterprise' APPROVED: li City Admin strator J c Qz a " L (S S`�'O N E`er& Y®�J l`�T B Y ' MEtflBRS: PACIFIC STOCK EXCHANGE E 4' � November 11, 1982 , ,City ,Council � City of Huntington Beach P. 0. Box .,190 'Huntington Beach, CA 92648 ,,Att�ni. Mr. Stephen V. Kohler, Housing;and Community Dcavelopment.Department } Subject. _Underwriting Agreement for S�ng1, Family Mortgage Revenue Bonds' ' Honorable Council Members: This letter will se0 s�an agreement between the City of Huntington Beach and Stone & Youngberg and Merrill Lynch White Weld Capital Markets Group�to serve, `as ,4anaging Underwriters to.the City u�4il the parties enter into-an actual ,Purchase Contract regarding the nego,',. d sale of single family mortgage revenue bonds to be issued by the Cite (the, "Bonds"). You have informed,, us that the City intends to issue_.the Bonds and provide e funds for mortgages on 'single-family residences for projects to be built by various developers and for this"purpose requires the services bf Managing "Underwriters' to structure the financing and to enter into a Purchase,.Contract With the City to purchase the .Bonds through a negotiated price that is agreeable to both 'parties. { As Managing Underwriters; we wi11 use our utmost efforts to raise funds at tine most reasonable rates attainable in the market under then existing conditions. Ili amplification of the understanding between the City 'and the Managing Underwriters, Stone & Youngberg and Merrill Lynch White Weld Capital Markets Group agree to undertake the below listed services and functions. A. Struct.uring the Financings: is As Managing Underwriters to the City, we will work with,your stafe in designing the scope of an economic feasibility study addressing the t+ 'market6hility�of the projects and their projected cash flow. We will also assist the City in the Ireview and application oVthe study's results. r{ 2. Tlie Managing Underwriters will work with the City's `bond counsel, '` <; ,Jones hall Hill & White, 'in recommending specific terms and conditiohs affecting the basic security of thEi Bonds. 3 The Managing, Underwriters will assist the City in'selecting a major banking firm to s'erve,as trustee for the mortgage lending programs. We will assist bond counsel ,in-preparing a list of services required Of, the trustee, f ° ONE CALIFORNIA STREET:SUITE 2800 • SAN FRANCISCO. CALIFdRNIA 94111 (41:1981-1314 4 {i e V z ,. City Counci l r, Ci ty of Huntington 'Beach November 11, 1982 Page 2 4 The Managing Underwriters will assist the City and developers in se-l�cting qualifi,�d mortgage lenders to originate and service the I mortgage loans.' The Managing Underwriters will assist the City �$ define the rules and regulations to be adopted by the Ci1y that prescribe standards by whi h mortgages are purchased aqd, serviced. - _ 5. The,Managing Underwriters will prepare detailed mortga� iriginating and servicing guides that define specific procedures 1\ ;selecting eligibile.mortgages and mortgagors and set forth report:.,-,ng requirements for the servicing of such loans. r6..:-- The- Managing-Underwriters will direc';-;a cash flow analysis that evaluates the revenue derived from the mortgage loans, including prepayments and penalties, and determines the optimum maturity structure based on market conditions and security provisiQ,ns and, recommends an investment program to maximize yield on in,iestable funds. t 1 7. The Managing Underwriter-s'will prepare the text of a bond prospectus '`� rr •� for sale of the recur'"es. Such prospectus{will include,a tl 1V description of the bonds and their � ecurity,,,,the parties to the agreements, the projects, the mortgage lending program, and pertinent] f fi.nancial and economic data. In preparation of such prospectus we fir, ; w Wl' xercise due diligences in the ascertainment of all material facts and circumstances regarding the projact and in their disclosure„ in the prospectus, 8. The Managing Underwriters will contact one or raore rating agencies and provide them with sufficient information to obtain a rating on the bonds prior to their sales f� 9. The Managing UnderwWers will represent the City at any necessary information meeting or meetings. (Depending upon the results of the feasibility study and/or the status of the municipal bonO market, such meetings may or may not be necessary.) y B. Marketing the Bonds: 1.' The Managing Underwriters will use their best efforts to accomplish the formal marketing of the Bonds which should be accomplished at the earliest dates possible consistent kith sound investment banking and underwriting principles. It is intended that, once purchased by the Managing Underwriters, the Bonds will be re-Offered to the public on the basis of an immediate "bona fide public,%offering The Managing a� Underwriters may form a group of investment banking firms for the ipurpose of underwriting and selling the Bonds. o , U Ci�tyfCo4�flcy1 �- City of Huntington Beach November i l , 19192 ; - Pa ge. 3 2. At the designated time.for ,sale of the Bonds, the Managing Underwriters will submit an offer to the City to purchase the Bonds, subject to=pertinent resolutions, the Official Statement, a minimum rating of investment grade (Baa or BBB) by,either Moody's'Investors Service and/or Standard & Poor's Corporation, and all other necessary documents, approvals, and proceedings governing such Bonds having been,determined by bond counsel , the City, and the Managing Underwriters to be satisfactory in all respects for financing purposes. 3. At least one day prior to the submission of any such formal offer to the City for the purchase of the Bonds, the Managing Underwriters' will indicate to the City the interest rate or rates, the purchase price from the City, and public offering price of4he Bonds which we;, then estimate will be included in such offer. C. General Provisions Relating to the Clay and_the Managing Underwriters: 1 . The City agrees to make available to tCiv.44anaging Underwriters without cost-,sufficient copies of the economic and other reports, agreements, contracts resolutions, Prelirrinary and Final 'Official Statements, and other relevant documents pertainingto the projects, the City, or the bonds as reasonably may be .required from time to time for"the"prompt and efficient performance by the Managing Underwriters of their obligations hereunder. 2. The'Managing UnderwriteY`s shall pay'thei,r own out-of-pocket and other expenses, the cost of Blue Sky and Investment Memoranda used by the Underwriters and all advertising expenses' in connection with the `public offering af_the Bonds. Fl s 3. The City shall pay from the proceeds of the Bonds or other funds of- the C�,ty all costs and expenses customarily paid therefrom, including �} the cost of--_`-,inting the bonds., Official Statements and other r, documents,!: Jfbes, and expenses of its legal counsel , bond counsel, special tax counsel , consultants accountants, rating services, and of any'ather experts retained by the City in connection with the financing.. Stone & Youngberg shall not incur any obligations„ or expenses�,or~1hich City is responsible without prior written consent .of City. 11 4. It ,is expr6ly understood and agreed, and the City hereby recognizes t 1' that ir+ performing its activities pursuant to a negotiated sale that the Managing Underwriters are acting solely in their own.,Aehalf as the prospective manager of an underwriting group which pl,-;is to submit to the City a proposal to purchase the bonds for resale. '.1. Nothing herein shall be construed to make the Managing Underwriters !, an employee or financial, fiscal; or other advisor of the City with respect to tb'e si�,'Ie-family Mortgage revenue bond issue, or to establish any fiduciary relationship between the City and the Managing Underwriters,. it is understood that Stone & Youngberg may serve as financial advisor to the City or its redevelopment agency on other types of public.financing. City Council If f ' C!ty of Huntington Beach,, November 1.1 , 1982 Page ;5. This agreement shall extend to the date of sale of the Bonds as con- -s templated herein, when the formal bond Purchase Contract is> entered into by the parties. 6 The City`may terminate this agreement at any time effective 30 days following`written notice to Managing Underwriters from the City. 7. Stone & Youngberg shall defend, indemnify and hold harmless City, its officers,;agents and employees, from and against any and all liability, judgments damages, costs,. losses, claims, including Workers' Compensa- tion cl.a,)ms, and expenses resulting fr.-am or connected with,,Stone & e Y6`ungbrg's negligence or other tortious conduit i'n the performance of this agreement.' i 8, Upu;�,termination of"th.is agreement, the City shall, be under no further obligation to the Managing Underwriters h6reunder; except>%that the City is obligated ,to pay to the Managing Underwriters any expenses n- erred-on behalf of the City pursuant to Paragraph C(3) of this agree meat should the City not sell the blinds to the Managing Underwriters on°behalf of the Underwriters pursuant to Section a of this agreement. Upon your acceptance set° forth below, this letter wil constitute an agree- ment between the City and the undersi>gned, STONE & YO CBE { s <� r anager) By Accepted this day ofL 1983. CITY OF HUNTINGTON BEACH z ATTESTc z r' City Clerk Mayor APPROVED AS TO FORM:/ INITIATED AND APPROVED AS TO CONTENT: City Attorney Director, Business and Industrial Enterprise O 410 �. _ ilk 7 r+.reuVr' F. City ,Counei 1 City of Huntiigion Beach N6vember 11, 1982 Page 5 f` APPROVED.t ._ City Affm r r RIF n 1� _ REQUEST FOR CITY 'COUNCIL ACTION RH 84-3 Date January 16, 1984 �� i Submitted to: Honorable Mayor and City Council lrlerrbers GtT� Submitted by: Charles W. Thompson, City Admi ni st- to Fra}aaredby: Special Projects Offic �f~ C G1��I��Efx .1 Subject: AMENDMENT TO STONE & YOU GBERG INVESTMENT B�IA KE-R�S7 N ERS FOR SINGLE FAMILY MORTGAGE REVENUE BOND Statement of Issue, Recommendation,Analysis, Funding Source,Alternative Actions,Attaci.merAS- STATEMENT OF ISSUE: 4 Since late in 1982, the City has maintained a contract wlth the investment banking firm of Stone & Youngberg of Sur, Francisco. Th;s contract is of two parts. First, securing financia. adv«jr services of the firm for the Redevelopment Agency and second, :._curing underwriting services of the firm regardinc Single Family Mortgage Revenue Bonds. Current contract secures the services for Single Family Mortgage Revenue Bonds of Stone & Youngberg, as co-un%erwriters with Merrill lynch, Whiteweld Capital Marketings Group. Since it is no longer necessary to secure the services of Merrill Lynch, the proposed amendment to the previous agreement eliminates reference to this firm. RECOMMENDATION: Approve and authorize the City Clerk to execute the attached amendment agreement, designating the firm of Stone & Youngberg as the sole underwriter's for tha City's future Single Family Mortgage Revenue Bond finaiicings ANA0SIS: When the City solicited proposals for firms to provide underwriting services for single `-mil; mortgage revenge bonds, Stone & Youngberg submitted a proposal to provide such services in conjur-tion with Merrill Lynch. After- analysis of this proposal and interviews with representatives of e firms, the City selected ;he firm of Stone & Y.,angbPrg to provide such services. At this *iive, this arrangement to provide co-underwriting services between Store & "oungberg and Merrill Lyncr, has been terrrinated. In addition, it is the opir.,..,n of staff that securing the services of both firms for single-family mortgage revenue bend issues is no longer necessary. Therefore, staff recommends adoption of the attached amended contract, stipulating Stone & Youngberg as sole underwriters for any future single-family mortgage revenue bond issues. FUNDING SOURCE: Underwriter fees are paid from bond proceeds; no budget impact. P10 4181 a RH 84-3 January 16, 1984 Page Two ALT-;NATIVES: 1. Do not approve the proposed amended contract. 2. Maintain the current agreement, stipulating Stone & Youngberg and Merrill L;,e*,ci'z, as co-underwriters for single-family mortgage revenue bond . ATTACHMENTS: 1. Amended contract CWT:SVK: ip f. FLA ti Si one e n er MEMBERS: PACIFIC ST01K EXCHANGE January , 1� 34 City Council City of Huntington Beach P. C. Box 190 Huntington 3each, CA 92648 Attn: Mr. Stephen V. Kohler, Housing and Community Development Department Subject: Underwriting Agreement fcr Siog+e '-amiiy Mortgage Revenue Bonds Honorable Council Members: This letter will serve as an agreement between the City of Huntington Beach and Stone & Youngberg to serve as Managing Underwriter to the City until the parties enter into an actual Purchase Contract regarding the negotiated sa'i of single family mortgage revenue bonds to be issued by the City (the "Bonds"). This underwriting agreement supersedes and replaces the underwriting i.greement entered into on January 24, 1983 between the City and Stone & Youngberg and Merrill Lynch White Weld Capital Markets Group dated November 11, 1982. You have informed us that the City intends to issue the Bonds and provide funds for mortgages on single-family residences for projects to be built by various developers and for this purpose requires the services of a Managing Underwriter to structure the financing and to enter into a Purchase Contract with the City to purchase the Bonds through a negotiated price that is agreeable to both parties. As Managing Underwrite:~, we will use our utmost efforts to raise funds at the most reasonable rates attainable in the market under then existing conditions. In amplification of the ;. ,derstanding between, the City and the .Managing Underwriter, Stone & Youngberg agrees to undertake the below listed services and functions. A. Structuring the Financin s: 1. As Managing Underwriter to the City, we will work with your staff in designing the scope of an economic feasibility study addressing the marketabi' `v of the projects and their r:-ojected cash flow. We will also a.:s., . the City in the review and application of the study's results. 2. The Managing Underwriter will work with the 4ity's bond counsel, Jones Hall Hi;1 & White, in recommending specific terms and conditions affecting the basic security of the Bonds, ONE CALIFORNIA STREET. SUITE 2800 • SAN FRANCISCG. CALIFORNIA 94111 - (415)981.1314 City Council �ity of Huntington Beach January 4, 1984 Page 2 3. The Managing Underwriter will assist the City in selecting a major banking firm to serve as trustee for the mortgage lending programs. We will assist bond counsel in preparing a list of services required of the trustee. 4. The Managing Underwriter will assist the City and developers in selecting qualified mortgage lenders to originate and service the mortgage loans. The Managing Underwriter will assist the Ci,.y define the rules and regulations to be adopted by the City that prescribe standards by which mortgages are purchased and serviced. S. The Managing Underwriter will prepare detailed mortgage originating and servicing guides that define specific procedures for selecting eligibile mortgages and mortgagors and set forth reporting requirements for the servicing of such loans. 6. The Managing Underwriter will direct a cash flow analysis that evaluates the revenue derived from the mortgage loans, including prepayments and penalties, and determin^s the optimum maturity structure based on market conditions and security provisions and recommends an investment program to maximize yield in investable funds. 7. The Managing Underwriter will prepare the text- of a bond prospectus for sale of the securities. Such prospectus will include a description of the bonds and their security, the parties to the agreements, the projects, the mortgage lending program, an, ertinent fin-,racial and economic data. In preparation of such prosp%�ccus we will exercise due diligences in the ascertainment of all material facts and circumstances regarding the project and in their disclosure n the prospectus. S. The Managinq Underwriter will contact one or more rating agencies and provide them with sufficient information to obtain a rating on the bonds prior to their sale. y. The Managing Underwriter will represent the City at any neces—'ry information meeting or meetings. (Depending upon the results of the feasibility study and/or the status of the municipal bond market, such meetings may or may not be necessary.1 B. Marketing the Bonds: 1. The Managing Underwriter will use its best efforts to accomplish the formal marketing Qf the Bonds which shiuld be accomplished at the earliest dates possible consistent with sound investment banking and underwriting principles. It is intended thct, once purchased by the Managing Underwriter. the Bonds will be re-offered to the public on the basis of an immediate "bona fide public offering". The Aanaging Underwriter may form a group of investment banking firms fur the purpose of underwriting and selling the Bonds.. City Council City of ,:untinggto" Beach January 4, 1984 Page 3 2. At the designated time for sale of the Bonds, the Managing Underwriter will submit an offer to the City to purchase the Bonds, subject to pertinent resolutions, the Official Statement, a minimum rating of investment grade (Baa or BBB) by either fioody's investors Service and/or Standard & Poor's Corporation, and all other necessary documents, approvals, and proceedings governing such Bonds having been determined by bond counsel, the City, and the Managing underwriter to be satisfactory in all respects for financing purposes. 3. At least one day prior to the submission of any such formal offer to the City for the purchase of the Bonds, the Managing Underwriter will indicate to the City the interest rate or rates, the purchase price from the City, and public offering price of the Bonds which we then estimate will be included in such offer. C. General Provisions Relating to the City and the Managing Underwriter: 1. The City agrees to mane available to the Managing Underwriter without cost sufficient copies of the economic and other reports, agreements, contracts, resolutions, Preliminary and Final Official Statements, and other relevant documents pertaining to the projects, the City, or the bonds as reasonably may be required from time to time for the prompt and efficient performance by the Managing Underwriter of its obligations hereunder. 2. The Managing Underwriter shall pay its own out-of-pocket and other expenses, the cost of Blue Sky and Investment Memoranda used by the UnCirwriters and all advertising expenses in connection with the public offering of the Bonds. 3. The City shall p: , from the proceeds of the Bonds or other funds u` the City all costs and expenses c:!jstomarily paid therefrom, including the cost of printing the bonds, Official Statements and other documents, the fees and expenses of its legal counsel, bond counsel, special tax counsel, consuitantF, accountants, rating strvices, and of any other experts retained by the City in connection with the financing. 4. It ii expressly understood and avreed, and the City hereby recognizes that in performing its activities pursuant to a negotiated sale that the hianaging Undr-writer is acting solely on itsir own behalf as the prospective manager of an underwritin, group which Plans to submit to the City a proposal to purchase the b�mds For resale. Nothing here-,.I shall be construed to make the Managing Underwriter an employee or financial, fiscal, or other advisor of the City with respect to the single-family mortgage revenue bond issue, or to est-blish any fiduciary relationship between the City and the Managing Underwriter. It is understood that Stone & Youngberg may serve as financial advisor to the City or its redevelopment agency on other types of public financing. City Council City of Huntinggton Beach January 4, 1984 Page 4 5. This agreement shall extend to the date of sale of the Bonds as contemplated herein, when the -formal bond Purchase Contract is entered into by the parties. 6. Thy= City may terminate this agreement at any time on or after the last day of December, 1984, following receipt by the Managing Underwriter of written notification from the City. Z. Upon terminatiun of this agreement, the City shall be under no further obligation to the Managing Underwriter hereunder, except that the City is obligated to pay to the Managing Underwriter any expenses incurred e:: behalf of the City pursuant to Paragraph C(3) of this agreement should the City not sell the bonds to the Managing Underwriter on behalf of the Underwriter pursuant to Section E of this agreement. Upon your acceptance set forth below, this letter will ccnstT :ute an agreement between the City and the undersigned. STONE & YOUNGBERG i 7 fJ By rT Accepted this t`-h day of 1984 CITY OF HUNTI97$7BEACH y ATTEST: 'T;ty C I er ia, APPROVED AS TO FORM: INITIATED AND APPROVED AS TO CONTENT: BY By � .. i Y on i ctor usiness anr� In�ustz ia1 Enterprise APPROVEA?: 41 By ity QFTHis ra or MF EEkS. —flC STUCK EXCHA'—L January 19, 1933 Stephen V. Kohler Senior Community Development Specialist Housing and Community Development P. 0. Box 190 Huntington Beach, CA 92643 Dear Stephen: At your request, and as you and Scott discussed today, I have shorn oelove a proposed schedule of events leading up to the delivery of the City's residential r,�ortgage revenue bonds. 14 beliava this schedule will crovide sufficient time for ;.11 particioants to revie and comment on the financing documents prior to tna Standard ? is site visit now zcheduled fir February 16, Date Ever` January 28 Distrib+:te financing February S Doc•rm-nts review session in Beach. Developers, and the lenders reco7mended by developers, should also be present to revie',c he Develop�,?r Aareen,ent and Sales and Servicing Agreement. 7 City Council pass resolution giving conceptual approval to urban ;-lest Corr,.;uniti.-�s 16 Standard & Pcor''s site visit. 25 Target bate for Standard & Poem's rating. ,.aStrategy session v,itn developer's. Jaadline for devel op2rs to s i qn Level oper Agreerren. and deposit additional fees (approxiniately 4 ooints) . March 1 Print acid distrihut-, preliminary officia. statercent. 3-3 Pricing and marketing of bor:ds. 14 city Council approve Purchase Contract. 24 Deliver on6s and bona proc,cds. C rF 6,N,A STREET SU TE FrA :7,$^C 1 . -,:JF'%!A 'M 11 7 • Ate:y 0 1'" p , �ysi+2 LD4�,•�-{' ' 're.iL y�c C{:D� j� � �y t� -3�{ o .d. CETY OF HVII,�TIHGTON BENCH Z COUNCIL ADMINISTRATOR COMMUNICATION To Mayor Bob Mandic and Councilmembers From Charles W. Thompson City Administrator Subject UPDATE ON PROGRESS TOWARD SINGLE- Date January 17, 1983 FAMILY MORTGAGE REVENUE BOND ISSUE OF 1983 I ,iould like to take this opportunity to bring the Ccuncilmember, up-to-date regard- ing the staff's progress on the Single-Famil- "- ' iag2 Revenue Bond Issue of 1983. 1. Three developers have expressed int rci.:ipating in the Single-Family Mortgage Revenue Bond Issue in Buff, ,llar amonr;ts to fully subscribe the City's anticipated entitlement ai.,,unt from the Mortgage Bond Allocatioo Committee of $20 million. These developers are: a) UrbanWest Communities 3030 South Bundy Drive Los Angeles, California 90066 Dollar Amount - $15,503,840 (UrbanWest Communities will be a joint venture partnership with the Hunting- ton Beach Company, and the project upon which bond proceeds will be used is "The Ranch.") b) Woodtree Development Company (in conjunction with Citadel Service Corporation) 1665 Plµcantia Avenue Costa ' :sa, California 92627 4 Doll Amount - $3,100,800 The project to be financed with bond proceeds is located in the Talbert-Beach Redevelopment Project Area. c) Lindborg/Dahl 17220 Newhope Street Fountain Valley, California 92708 Dollar Amount - $1,395,360 The proceeds of the bond issue will be ased by this developer to finance single-family homes on the east side of ;_ake Street between, Hartford and FrankfPrt Avenues. 2. In order to maintain the City's current position on the State's waiting list for an allocation which will authorize the City to sell single-family bonds, it is necessary to certify to the State receipt from the partici,,ating developers of a letter of credit in an amount equal to one-half of one percent of the total amount of financing desired y each developer. The State haE established Friday, y January 21, 1983 as the deadline by which the City Administration must certify receipt of such letters of credit. To accos;imodate this State deadline, staff has requested the above referenced developers to submit letters of credit to the City by 12.00 Noon or Wednesday., January 'g, 1983. Mayor Mandic and C-Duncilebers January 17, 1983 Page Two 3. It is important to note that participating developers are placing this one-half of one percent letter of credit at risk on January 19. State Law requires that, should the City be unable to successfully prepare and sell the bond issue, the developers will forfeit the deposit represented by the letters of credit. 4. The City Council has stated its intention, by Resolution No. 5155 (see attached), to participate in a Single-Family Mortgage Revenue Bond Issue during 1983, and it is upon the authority of this resolution that staff submitted the application to the State's Mortgage Bond Allocation Committee which is now pending. QUESTION FOR COUNCIL Since, in the immediate future, the City will be asking participating developers to placL their own funds at risk for the opportunity to participate in a future single-family mortgage revenue bond issue, it is appropriate at this time for the Council to reaffirm this expres- sion of interest in participating in such a bond issue. Obviously, it is not the staff's intention to accept developers' letters of credit if the Council is not in concurrence with the succeeding actions that will be necessary to fully prepare and sell a single-family bond issue. 5. If there are extenuating circumstances which prevent the City in selling a bond issue after accepting letters of credit from the developers and receiving an allocation from the Mortgage Bond Allocation Committee, then the amounts in- cluded in the developers' letters of credit will accrue to the City and, by State Law, are stipulated for use only to improve hcusing opportunities for low and moderate income households. 6. The schedule for the subsequent actions regarding preparation and sale of the bond issue is attached for the Council ' consideration. I hope that this information will be of assistance in keeping the Councilmembers aware of staff's actions as we move forward in the preparation of the Single-Fami;.,i Mortgage Revenue Bond Issue of 1983. TT:SVK:jb attachment i THE CITY OF HUNTINGTON BEACH SINGLE-FAMILY MORTGAGE REVENUE BOND PROGRAM SCHEDULE January 1.9, 1983 Receive letters of credit from the developers January 21, 1983 The State accepts the City Administrator's certification that the letters of credit have been received totaling the City's full entitle- ment request of $20 million in State allocation. January 28, 1983 Standard and Poor's (the official bond rating agency) visits sites of developers to be financed with bond proceeds and conducts tour of the City. February 7, 1983 Mortgage Bond Allocation Committee meets to approve (week of) allocations for all local jurisdictions including anticipated $20 million allocation for the City of Huntington Beach. March 1, 1983 Approximate date of sale of the bond issue. April 1, 1983 Approxi;iate date issue closes and bond proceeds are available. ESOLUTION NO. �1�c r 5 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF --- HUNTINGTON BEACH STATING ITS INTENT ION1 TO ISSUE MORTGAGE REVENUE BONDS WHEREAS, the Legislature of the State of California has authorized cities and redevelopment agencies to make long-term, low-interest loans through qualified mortgage lenders to finance residential construction, rehabilitation, and resale of existing housing stock within the local jurisdiction; and The Legislature, in Health and Safety Code Sections 52000 et seq. , has esta- blished parameters by which a city clay issue mortgage bonds for the purpose of financing such construction, rehabilitation and resale; and The City of Huntington Beach (the "CITY") believes that it is in its best interest to utilize rr:ortgage revenue bonds to ir-crease the supply of housing in Huntington Beach; and Expanding housing opportunities through the issuance of mortgage revenue t, +s is a valid public purpose; and In order to issue the banns successfull,,. the City requires the advice of qualified investment bankers and bond counsel , NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Huntington Beach that: 1. It hereby approves and authorizes the issuance of mortgage revenue bonds, pursuant to Health and Safety Code Sections 52000 et seq. , in an amount not to exceed $20,000,000. 2. The bonds will be payaole solely out of revenue; and other amounts derived by the City or its Redevelopment Agency (the "AGEN+CY") from mortgage loans, the funds in the debt service reserve fund, and other funds and account, created by the trust indenture establishing the program and the earnings thereon. The bonds will not be a general or moral obligation of the City or Agency within the meaning of any constitutional or statutory pr-ovisioi.s, not, a charge against its general credit. 3. Neither the members of the City Council , Redevelopment Agency, nor any official or employee of the City, nor any person executing the bonds issued under the program, shall be liable personally on the bonds or be subject to any personal liability of accountability by reason of the issuance thereof. 4. It is hereby found and determined that the issuance of such bonds is a valid and lawful public purpose. 5. Bond proceeds shall be used for either, one, two, or _I1 of the follow- ing purposes: sale of newly constructed residences, sale of existing homes, or substantial rehabilitation of existing residences. 6. The City Administrator is authorized and directed to submit to the Mortgage Bond Allocation Corr,Jttee an applications of the purpose for which bonds are proposed to be issued and the amount of the proposed issue, and to take further actions as are r,2quired to prepare a mortgage bond issue and program. PASSED AND ADOP(ED by the '-Ity Co.,ncil of the City of Huntington Beach at a regular meeting thereof he'd on the 7tir day of September , 1982. ATTEST: ity4Clerk Mayor REVIEWED AND APPROVED: APPROVED AS TO i.O M: , City Ad—ml ni s t r at or City Attorney INTIATED AND APPROVED: — Director, Business and Industrial Enterprise N 1 s � ? �Aft S or brr�o� HC EQUEE FOR CITY COUNCIN ACTION ,01140 pit/ Date November 24, 3.982 Submitted to: Honorable Mayor and City Council MembersA1'ItOvLA BY CITY COI7N[;iL Submitted by: Charles W. Thompson, City Administrator Prepared by: !}_Jctffice of Business and Industrial Enterprise Subject: `//// APPROVAL OF CONTRACTS WITH INVESTMENT BANKE ciEP� i EXEMPT FINANCINGS: STONE AND YOUNGBERG AND MERRILL LYNCH Statement of Issue, Recommendation,Analysis, Funding Source,Alternative Actions,Attachn.ants. STATEMENT OF ISSUE: t� At its regular adjourned meeting of Monday, November 15, 1982, the City Council selected the firms of Stone and Youngberg and Merrill Lynch to serve as co-managers for the City's future single-family mortgage revenue bond financing, and the firm of Stone and Youngberg to serve as chief underwriter an? financial advisor for all other tax exempt financings. Also at that time, u„uncil authorized staff to negotiate contracts with these firms and attached for the Council 's consideration at this time, are such contracts. RECOMMENDATION: Approve and authorize the City Clerk to execute: 1. Underwriting Agreement with Stone and Youngberg/Merrill Lynch White Weld Capital Markets Group for single-family mo,,tgage revenL bonds. 2. Underwriting Agreement with Stone and Youngberg for multi-family mortgage revenue bonds. ANALYSIS. Pursuant to the Council 's authorization of Monday, November 15, 1932, staff regt:Csted the f'.rms of Stone and Youngberg/Merrill Lynch et al to prepare draft contracts tc provide tt,e services of investment banker/underwriter for the City's future tax exempt financings. Such contracts were prepared by these firms and received on Friday. November 12, 1982 and subsequently forwarded to the City Attorney's office for revi^w ana approval . Because of the nature of the services to be provided by these firms and the ,iature of the specific tax exempt financings to be undertaken are diverse, two contracts ,.re necessary; specifi- cally: 1. The firm of Stone and Youngberg will act as senior manager and Merrill Lynch will co--manage any single-family tax exempt mortgage revenue bonds which the City might issue and the first contract is to secure these firms' services for this purpose. 2. Stone and Youngberg will act as senior manager for any multi-family tax exempt revenue bonds which the City might issue and the second contract is to secure the firm'sservices for this purpose. r It is also important to note that all fees and expenses of both Stone and Youngberg and Merrill Lynch a;-e paid solely out of bond proceeds and no expenditure of City funds will be required to retain the services of these firr,. Since these firms operate on a Pl 0 4/81 �a "contingent fee" basis, fees and expenses are only paid if, indeed, bonds are sold. This provides the City the opportunity to garner the highly qualified services of these firms to negotiate with developers and structure such issues without incur- ring costs. However, while the fees and expenses of the underwriting firm are payable solely out of bond proceeds, the Cite could be liable for the payment of certain costs o{ issuance should a bond issue be prepared but not sold; specifically, costs charged for the services of a rating agency, a feasibility study, and bo-i print- ing, as well as any out of state travel which might be r,_,,_,ired by City staff. It is important to note, however, that the agreements between any developer to benefit from the financing and the City will be in place prior to incurring .any of these expenses, and such developer agreements will require developer contri- butions to cover such cost should the bond issue be cancelled prior to sale. Therefore, while the City would be liable for payment of these costs should an issue be cancelled immediately prior to sale, the City would have the assurance of funding from an outside source through the developers to cover such costs. To assure the City the maximum flexibility of structuring and timing of any tax exempt financings which might be undertaken, it may also be desirable from time to time to enter into similar agreements to garner the services of other investment banker/underwriter firms. In the future, as was pointed out to the Council at the time of the selection of the Stone & Youngberg/Merrill Lynch firms, should it be- come evident that some additional firm(s) may have unique qualifications for one specific tax exempt financing, staff will forward to the City Council a recommen- dation to contract with such a firm on a one-time r,nly basis or to recommend that some additional firm(s) "co-manage" with the Stone & Youngberg firm. Also attached for the City Council 's information is a schedule as prepared by Stone & Youngberg for the consummation of the single-family bond financing pro- gram for this calendar year. The remaining steps in this financing may be sum- marized as follows: The State: of California's Mortgage Boni AV,ocation Committee will certify the City's position on the allocation list on Friday, January 21, 1983. Followina this certification (which will hold the City's position on the State's alloca- tion list), a feasibility consultant will commence work on a study to document the marketability and demand for the new construction housing units to be produced and financed with bond proceeds. This information, along gith the proposed structure of the financing, will be presented to the bond rating agency (Standard & Pocr's) when that agency visits the City on February 16, 1983. Following that site visit, Standard & Poor's rating committee will meet and issue the actual rating for the bonds on approximately February 25. Following receipt of this -ting, the Stone & Youngberg firm and City staff will meet with developers in a final strategy session to review the financing docu- ments and, at this time, developers will be required to post the additional fees required for participation (approximately 4 percent). March 1 is the target date for the printing and distribution of the preliminary Official Statement, and the bonds will be preliminarily priced and marketed March 3 - 8. It will be necessary to have a special City Council meeting on March 14 so that the City may approve all of the financing documents and the purchase contract. Bonds and 'bond proceeds will be delivered March 24, 1983. The City may terminate this agreement at any time effective 30 days following notice to the Managing Underwriters. ALTERNATIVE ACTIONS: Refer the attached contracts back to staff for furVier review. FUNDING SOURCE: All fees and expenses of both firms will be paid solely out of bond proceeds or developer contributions; no expenditure of City funds is required. ATTACHMENTS: Underwriting agreements Proposed Schedule of Events CWT:SVK:jb r'' •. (S�P.L-GAN A�-- ip C� / C,f erks Cop y� STONE & --�70UNGBER.G MEMBERS: PACIFIC STOCK EXCHANGE November 11, 1982 City Council City of Huntington Beach P. 0. Box 190 Huntington Beach, CA 92648 Attn: Mr. Stephen V. Kohler, Housing and Community Development Department Subject: Underwriting Agreement for Multi-Family Mortgage Revenue Bonds Honorable Council Members: This lettE will serve as an agreement between the City of Huntington Beach and Stone & Youngberg to serve a�, Managing Underwriter to the City until the parties enter into an actual Purchase Contract regarding the negotiated sale of multi-family mortgage revenue bonds to be issued by the City (the "Bonds"). You have informed us that the City intends to issue the Bonds and provide funds for mortgages on multi-family residences for projects to be built by various develo;lers a, ' 7or this purpose requires the services of a Managing Underwriter to structure the financing and to enter into a Purchase Contract with the City to purchase the Bonds through a negotiated price that is agreeable to both parties. As Managing Underwriter, we will use our utmost efforts to raise funds at the most reasonable rates attainable in the market under then existing conditions. In amplification of the understanding between the City and the Managing Underwriter, Stone & Youngberg agrees to undertake the below listed services and fun,.,:ions. A. Structuring the Financings: 1. As Managing Underwriter to the City, wp will work with your staff in designing the scope of .n economic feasibility study addressing the marketability of the projects and their projected cash flow. We will also assist the City in the review and application of the study's results. 2. The Managing Underwriter will work with the City's bond counsel, ` Jones Hall Hill & White, in recommending specific terms and conditions affecting the basic security of the Bonds. 3. The Managing Underwriter will assist the City in selecting a major banking firm to serve as trustee for the mortgage lending programs. We will assist bond counsel in preparing a list of services required of the trustee. ONE CALIFORNIA STREET. SUITE 2800 • SAN FRANCISCO, CALIFORNIA 94111 • (415)981-1314 a . City Council City of Huntington Beach November 11, 1982 Page 2 4. The Managing Underwriter will assist the City and developers in selecting qualified lenders to orini;,"Le and service the iortgage loans. The Managing Underwriters will assist the City define the rules and regulations to be adopted by the City that prescribe standards by whi::h mortgages are purchased and serviced. 5. The Managing Underwriter will work with developers in selecting lenders to act as credit enhancers on the multi-family bonds. We will work with the City and developers in negotiating qualification criteria and loan-to-lender structures that accomplish the Cit,y's financings. 6. The Managing Underwriter will direct a cash flow analysis that evaluates the revenue derived from the mortgage loans, ncludia,g prepayment:• and penalties, and determ:;;es the optimum maturity structure based on market conditions and security provisions and recommends an investment program to maximize yield on investable funds. 7. The Managing Underwriter will prepare the text of a bond prospectus for sale of the securities. Such prospectus will >nclude a description of the bonds and their security, the parties to the agreements, the projects, the mortgage lending program, and pertinent financial and economic data. In preparation of such prospectus we will exercise due diligences in the ascertainment of all material facts and circumstances regarding the project and in their disclosure in the prospectus. 8. The Managing Underwriter will contact one or more rating agencies and provide them with sufficient information to obtain a rating on the bonds prior to their sale. 9. The Managing Underwriter will represent the City at any necessary information meetinq or meetings. (Depending upon the results of the feasibility study and/or the status of the municipal bond market, such meetings may or may not be necessary.) B. Marketing the Bonds: 1. The Managing Underwriter will use its best efforts to accomplish the formal marketing of the Bonds which should be accomplished at the earliest dates possible consistent with sound investment banking and underwriting principles. It is intended that, once purchased by the Managing Underwriter, the Bonds will be re-offered to the public on the basis of an immediate "bona fide public offering". TV-- Managing Underwriters may form a group of investment banking firms for the purpose of underwriting and selling the Bonds. Amok Alk City Council City of Huntington Beach November 11 , 1982 Page 3 2. At the designated time for sale of the Bonds, the Managing Underwriter will submit: an offer to the City to purchase the Bonds, subject to pertinent resolutions, the Official Statement, a minimum rating of investment grade (Baa or BBB) by either Moody's Investors Service and/or Standard & Poor's Corporation, and all other necessary ,:ocuments, approvals, and proceedings governing such Bonds having been determined by bond counsel , the City, and the Managing Under- writer to be satisfactory in all respects for financing purposes. 3. At least one day prior to the submission of any such formal offer to the City for the purchase of the Bonds, the Managing Underwriter will indicate to the City the interest rate or rates, the purchase price from the City, and public offering price of the Bonds which we then estiioate will be included in such offer. C. General Provisions Relating to the City and the Managing Underwriter: 1 . The City agrees to make available to the Managing Underwriter witho: cost sufficient copies of the economic and other reports, agreements contracts, resolutions, Preliminary and Final Official Statements , and other relevai,t documents pertaining to the projects, the City, , the bonds as reasonably may be required from time to time for the t prompt and efficient performance by the Managing Underwriter of its obligations hereunder. 2. The Managing Underwriter shall pay its own out-of-pocket and other expenses, the cost of Blue Sky and Investment Memoranda used by the Underwriters and all advertising expenses in connection with the public offering of the Bonds. 3. The City shall pay from the proceeds of the Bonds or other funds of the City all costs and expenses customarily paid therefrom, including the cost of printing the bonds, Official Statements and other documents, the fees and expenses of its legal counsel , bond counsel , special tax, counsel , consultants, accountants, rating services, and of a:iy other experts retained by the City in connection with the financing. Stone & Youngberg shall not incur any obligations or expenses for which City is responsible witho,t prior written consent of City. 4. It is expressly understood and agreed, and the City hereby recognizes that in performing its activities pursuant to a negotiated sale that the Managing Underwriter is acting solely on its cwn behalf as the prospective manager of an underwriting group which plans to submit to the City a proposal to purchase the bonds for resale. Nothing herein shall be construed to make the Managing Underwriter an employee or financial , fiscal , or other advisor of the City with respect to the multi-family mortgage revenue bond issue, or to establish any fiduciary relationship between the City and the Managing Underwriter. It is understood that Stone & Youngberg may serve as financial advisor to the City or its redevelopment agency on other types of public financing. City Council City of Huntington Beach November 11 , 1982 Page 4 5. This Agreement shall extend to the date of sale of the Bonds as contem- plated herein, when formal bond Purchase Contracts are entered into by the parties. 6. The City may terminate this Agreement at any time effective 30 days following written notice to Managing Underwriter from the City. 7. Stone & Youngberg shall defend, indemnify and hold harmless City, its officers, agents and employees, from and against any and all liability, judgments, damages, costs, losses, claims, including Workers' Compensa- tion claims, and expenses resulting from or connected with Stone & Youngberg's negligence or other tortious conduct in the performance of this agreement. 8. Upon termination of this agreement, the City shall be under no further obligation to the Managing Underwriter hereunder, except that the City is obligated to pay to the Managing Underwriter any expenses incurred on behalf of the City pursuant to Paragraph C(3) of this agreement should the City not sell the bonds to the Managing Underwriter on behalf of the Underwriters pursuant to Section B of this agreement. Upon your acceptance set forth below, this letter will constitute an agree- ment between the City and the undersigned. STONE & YOUNGBERG f i' By ;. Accepted this } day of Lq , 1983. CITY OF HUNTINGTOIV BEACH �"�" -ATTEST: City Clerk Mayor APPROVED AS TO FORM: INITIATED AND APPROVED AS TO CONTENT: City Attorney Director, Business and Industrial Enterprise APPROVED: City Administrator (51 C) e) STONE & YOUNGBERG- MEMBERS: PACIFIC STOCK EXCHANGE November 11, 1982 City Council City of 'iuntington Beach P. 0. Box 190 Huntington Beach, CA 92648 Attn: Mr. Stephen V. Kohler, Housing and Communit3 ' velopment Department Subject: Underwriting Agreement for Single Family Mortgage Revenue Bonds Honorable Council Members: This letter will serve as an agreement between the City of Huntington Beach and Stone & Youngberg and Merrill Lynch White Weld Capital Markets Group to serve as Managing Underwriters to the City until the parties enter into an actual Purchase Contract regarding the negotiated sale of single family mortgage revenue bonds to be issued by the City (the "Bonds"). You have informed us that the City intends to issue the Bonds and provide funds for mortgages on single-family residences for projects to be built by various developers and for this purpose requires the services of Managing Underwriters to structure the financing and to enter into a Purchase Contract with the City to purchase the Bonds through a negotiated price that is agreeable to both parties. As Managing Underwriters, we will use our utmost efforts to raise funds at the most reasonable rates attainable in the market under then existing conditions. In amplification of the understanding between the City and the Managing Underwriters, Stone & ° �ungberg and Merrill Lynch White Weld Capital Markets Group agree to undertake the below listed services and functions. A. Structuring the Financings: 1. As Managing Underwriters to the City, we will work with your staff in designing the scope of an economic feasibility study addressing the marketability of the projects and their proje, ted cash flow. We will also assist 'he City in the review arid application of the study`s results. 2. The Managing Underwriters will work with the City's bond counsel, Jones Hall Hill & White, in recommending specific terms and conditions affecting the basic security of the Bonds. 3. The Managing Underwriters will assist the City in selecting a major banking firm to serve as trustee for the mortgage lending programs. We will assist bond counsel in preparing a list of services required of the trustee. ONE CALIFORNIA STREET. SUITE 1600 • SAN FRANCISCO. CALIFORNIA 94111 (4)5)981-i314 AMML City Council City of Huntington Beach November 11, 1982 Page 2 4. The Managing Underwriters will assist the City and developers in selecting qualified mortgage lenders to originate and service the mortgage loans. The Managing Underwriters will assist the City define the rules and regulations to be adopted by the City that prescribe standards by which mortgages are purchased and serviced. 5. The Managing Underwriters will prepare detailed mortgage originating and servicing guides that define specific procedures for selecting eligibile mortgages and mortgagors and set forth reporting requirements for the servicing of such loans. 6. The Managing Underwriters will direct a cash flow analysis that evaluates the revenue derived from the mortgage loans, including prepayments and penalties, and determines the optimum maturity structure based on market conditions and security provisions and recommends an investment program to maximize yield on investable f unds. 7. The Managing Underwriters will prepare the text of a bond prospectus for sale of the securities. Such prospectus will include a description of the bonds and their security, the parties to the agreements, the projects, the mortgage lending program, and pertinent financial and economic data. In preparatici of such prospectus we will exercise due diligences in the ascertainment of all material facts and circumstances regarding the project and in their disclosure in the prospectus. 8. The Managing Underwriters will contact one or more rating agencies and provide them with sufficient information to obtain a rating on the bonds prior to their sale. 9. The Managing Underwriters will represent the City at any necessary information meeting or meetings. (Depending upon the results of the feasibility study and/or the status of the municipal bond market, such meetings may or may not be necessary.) B. Marketing the Bonds: 1. The Managing Underwriters will use their best efforts t- accomplish the formal marketing of the Bonds which should be accomplished at the earliest dates possible consistent with sound investment banking and underwriting principles. It is intended that, once purchased by the Managing Underwriters, the Bonds will be re-offered to the public on the basis of an immediate "bona fide public offering". The Managing Underwriters may form a group of investment banking firms for the purpose of underwriting and selling the Bonds. City Council City of Huntington Reach November 11 , 1982 Page 3 2. At the designated time for sale of the Bonds, the Managing Underwriters will subm*Tt an offer to the C;ty to purchase the Bonds, subject to pertinent .,esolutions, the Official Statement, a minimum rating of irvestment grade (Baa or BBB) by either Moody's Investors Service and/or Standard & Poor's Corporation, and all other necessary documents, approvals, and proceedings governing such Bonds having peen determined by bond counsel , the City, and the Managing Underwrif,�rs to be satisfactory in all respects for financing purposes. J. At least one day pric- to the submission of any such formal offer to the City for the purchase of the Bonds, the Managing Underwriters will indicate to the City the interest rate or rates, the purchase price from the City, and public offering price of the Bonds which we then estimate will be included in such offer. C. General Provisions Relating to the City and the Managing Underwriters: 1 . The City agrees to make available to the Managing Underwriters without cost sufficient copies of the 3ronomic and other reports, agreements, contracts resolutions, Preliminary and Final Official Statements, and ether relevant documents pertaining to the projects, the City, or the bonds as reasonably may be required from time to time for the prompt and efficient performance by the Managing Underwriters of their obligations hereunder. 2. The Managing Underwriters shall pay their own out-of-pocket and other expenses, the cost of Blue Sky and Investment Memoranda used by the Underwriters and all advertising expenses in connection with the public offering of the Bends. , 3, The City shall pay from the proceeds of the Bonds or other funds of the City all costs and expenses customarily paid therefr 7, including the cost or printing the bonds, Official Statements and other documents, the fees and expenses of its legal counsel , bond counsel , special tax counsel , consultants,, accountants, rating services, and of any other experts retained by the City in connection with the financing, Stone & Youngberg shall not inc-r any obligations or expenses for which City is responsible without prior written consent of City. 4. It is expressly understood and agreed, and the City hereby recognizes that in performing its activities pursuant to a negotiated sale that 4he Managing Underwriters are acting solely on their own behalf as the prospective manager of an underwriting group which plans to submit to the City a proposal to purchase the bonds for resale. Nothing_ herein shall be construed to make the Managing Underwriters an emrdloyee or financial , fiscal , or r,ther advisor of the City with respect to the single-famil-, mortgage revenue bond issue, or to establish any fiduciary relationship between the City and the Managing Underwriters. It is understood that Stone & Youngberg may serve as financial advisor to the City or its redevelopment agency on other types of public financing,. City Council City of Huntingtor Beach November 11 , 1982 Page 4 5. This agreement shall extend to the date of sale of the Bonds as con- templated herein, when the formal bond Purchase Contract is entered into by the parties. 6. The City may terminate this agreement at any time effective 30 dz.ys following written notice to Managing Underwriters from the City. 7. Stone & Youngberg shall 6,fend, indemnify and hold harmless City, its officers, agents and employees, from and against any and all liability, judgments, damages, costs, losses, claims, including porkers' Compensa- tion claims, and expenses resultinn from or connected with Stone & Youngberg's negligence or other tortious conduct in the performance of this agreement. 8. Upon termination of this agreement, the City shall be under no further obligation to the Managing Underwriters hereunder, except that the C4ty is obligated to pay to the Managing Underwriters any expenses in- curred on behalf of the City pursuant to Paragraph C(3' of t`.is agree- ment should the City not sell the bonds to the Managing Underwriters on behalf of the Underwriters pursuant to Section B or ties agreement. Upon your acceptance set forth below, this letter will constitute an agree- ment between the City and the undersigned. STONE & YOUNGBER (as Senior Manager) By Accepted this day of 0 1983. CITY OF HUNTINGTON BEACH ATTEST: r Ci Mayor_y Clerk APPROVED AS TO FORM: INITIATED AND APPROVED AS TO CONTENT: City Attorney Director, BusinesG and Industrial Enterprise City Council City of Huntington Beach November 11, 1982 Page 5 APPROVED: L City ministrat r 3 P