SR - AGR-6339 - PROFESSIONAL SERVICES SANTIAGO HILLS II DEVELOPMENT� pP Og
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AGENDA ITEM
May 10, 2016
TO: Honorable Mayor and
Members of the City Council
THRU: Rick Otto
City Manager
FROM: William M. Kolbovv1;
Finance Director
ReviewedNerified
City Manage �_
Finance Dire or
To Be Presented By: Will Kolbow
X Cons Calendar
_ City Mgr Rpts
Council Reports
_ Legal Affairs
Boards /Crates
_ Public Hrgs
Admin Reports
Plan /Environ
1. SUBJECT
Award of Professional and Consultant Services Agreements for professional and technical
services in connection with the formation of a financing district and the issuance of bonds
to fund the costs of certain public improvements within the Santiago Hills II development.
2. SUMMARY
The Irvine Company, the developer of the project known as Santiago Hills Il, has asked the City
to form a financing district for the purpose of financing the cost of public improvements
proposed to be constructed as part of the Santiago Hills II project. This action would put
contracts in place for the "core" financing team, consisting of a Financial Advisor, Bond
Counsel, and a Special Tax Consultant.
13. RECOMMENDED ACTIONS I
1) Approve a Professional Services Agreement for financial advisory services with Fieldman,
Rolapp & Associates;
2) Approve an Agreement for Legal Services for bond counsel services with Quint & Thimmig
LLP, a California limited liability partnership; and,
3) Approve a Consultant Services Agreement for special tax consulting services with Willdan
Financial Services.
14. FISCAL IMPACT
Payment of fees for all of the consultants, including reimbursable expenses, will be contingent
on, and payable from the proceeds of the bonds or from Developer deposits. There will be no
impact to the City's General Fund.
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5. STRATEGIC PLAN GOAL(S)
3e. Enhance and promote quality of life in the community — Develop and strengthen
collaborative partnerships to enhance and promote quality of life programs, projects, and
services.
16. GENERAL PLAN IMPLEMENTATION
Not applicable.
7. DISCUSSION and BACKGROUND
Background
The City is currently reviewing an application by The Irvine Company that is asking to modify
existing development approvals for the area referred to as Santiago Hills II. The Santiago Hills II
site is located on the east side of Jamboree Road, west of the SR 241 Toll Road, and south of
Irvine Regional Park.
The original Santiago Hills development was built by The Irvine Company in the late 1980s.
During its construction, The Irvine Company received approvals to construct a second phase of
the development that called for nearly 12,000 homes and 1.7 million sq. ft. of commercial space.
While they did not proceed with construction immediately following the approvals, The Irvine
Company did come back to the City with significant changes to the project in 2000 that greatly
reduced the scope of the original proposal, but chose not to pursue it further at that time. While
significant time has passed, the Santiago Hills II phase of the overall project is still active and
entitled.
In 2005, the Santiago Hills II project was revised and approved again for residential
development, and included nearly 4,000 homes that extended all the way to Irvine Lake. The
Irvine Company chose not to start construction at that time, and over the years has dedicated a
large portion of the land as permanent open space. Today, only the area between Jamboree and
the 241 Toll Road remains available for development. The approvals for that property are still in
place today.
The application under consideration would modify The Irvine Company's existing approvals to
reduce the development from 1,596 homes on 500 acres, down to 1,180 homes on 417 acres.
Discussion
Section 8(a) of the 2005 Development Agreement addresses Public Improvements and the timely
formation of a Financing District. It states that at the owner's request, the City shall cause a
Financing District to be formed. Although no formal request has been made to form a Financing
District, staff has discussed The Irvine Company's desire to form a Financing District for this
purpose. It is still to be determined whether a Community Facilities District (CFD), pursuant to
the Mello -Roos Community Facilities District Act of 1982 (California Government Code
Sections 53311 et seq., as amended), or a 1913/1915 Assessment District will be formed. The
agreements with the consultants address the formation of both types of districts. When/if the
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application to modify the development is approved by the City Council, formation of the district
will be considered shortly thereafter.
In order to initiate the process it is necessary to contract with a number of consultants with
special expertise in district formation and bond financings (the "core" financing team). The
recommended consultants below have extensive experience with bond financings and financing
district formations throughout the State of California and, in particular, with the City of Orange.
Thus, staff is very confident in their abilities.
Financial Advisors: Fieldman Rolapp & Associates — approximately $68,500
Bond Counsel: Quint & Thimmig LLP — approximately $125,000
Special Tax Consultant Willdan Financial Services — approximately $39,500
Fieldman Rolapp & Associates, Willdan Financial Services and the law firm of Quint &
Thimmig LLP have provided financial advice, special tax consulting, and bond counsel services,
respectively, to the City in the past when other financing districts were formed, including the Del
Rio (Riverbend) CFD. Fieldman and Willdan have also assisted the City of Irvine in the
formation of financing districts in conjunction with The Irvine Company. Proposals for similar
services for the issuance of the Santiago Hills II financing district bonds were not sought from
other persons or firms offering such services because it will be more cost efficient to retain these
same firms rather than to acquaint new firms with the history of financing district formation in
the City and with The Irvine Company.
Future professional consultants that may be needed include, but are not limited to the following:
Disclosure Counsel, District Administrator, Trustee, Underwriter, Appraiser, and a Market
Absorption Consultant.
These consultants will be retained when we get closer to the issuance of the bonds.
It should be noted that the purpose of this district and the associated bonds is to finance the cost
of public improvements (i.e. roads, sewers, etc.). The cost to maintain the infrastructure specific
to the project amenities, such as private parks, trails, and parkways, will be the responsibility of a
homeowner's association established by The Irvine Company.
18. ATTACHMENTS I
Professional Services Agreement for Financial Advisor — Fieldman, Rolapp & Associates
Agreement for Legal Services — Quint & Thimmig LLP
Consultant Services Agreement — Willdan Financial Services
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