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HomeMy WebLinkAboutItem 4.07 DubRan AppraiserCITY CLERK FILE # 600-30 AGE N DA STATEM E NT CITY COUNCIL MEETING DATE: (October 19, 1999) SUBJECT: Authorization to Engage an Appraiser for the Dublin Ranch Assessment District and Negotiate a Contractual Agreement (Prepared by Interim Administrative Services Director Joe Aguilar). ATTACHMENTS: Resolution authorizing Staff to Engage Smyers Appraisal as the Appraiser for the Dublin Ranch Assessment District and to Negotiate a Contractual Agreement for services consistent with those delineated in the Circulated RFQ. 2. Copy of Response to RFQ by Smyers Appraisal 3. Copy of Circulated Request for Qualifications (RFQ) HN~CI~ STA~NT: ~e Appr~ser will be compensated on a non-contingent b~is, ~om ids prodded by ~e develop~-o~er of ~e Dublin R~ch Bsessment Dis~ct 1999-1 ~is~ct). ~e developer will be reimb~sed for ~s cost ~om bond proceeds should ~e Ci~ complete ~e pro~ective bond issue ~sacfion. ~e contact will be set for a not to exceed mo~t of $19,000. DESCRIPTION: The engagement of Smyers Appraisal as appraiser for the prospective Dublin Ranch Assessment District bond issue will allow the City to continue with the formation of the District and the issuance of bonds in a timely and efficient manner. The appraiser plays in key role in determining the mount of bonds that can be issued in the transaction. The appraisal report will become an integral feature of the transaction that will be disclosed in the official statements (offering prospectus) and will significantly affect the perspective of potential bond buyers of the bond issue. BACKGROUND: The City entered into a development agreement with the Jennifer Lin family for the~ development of l,500 acres in the eastern portion of the City. In accordance with that agreement and at the request of the Lin family, the City recently 'initiated proceedings for the formation of the District to finance public improvements in a portion of their land holdings (approximately 500 acres). The boundaries and the parameters of public improvements needed for the District are in the process of being determined by Lin family engineers and the City's Public Works Deparlxnent. The Lin family is also progressing with related planning requirements and approvals related to the subjectproperty. COPIES TO: \XDUBLINFS2XASNDublin Ranch Assrat Disfiagenda appraiser. doe ITEM NO. Earlier this year, the City engaged the law firm of Orrick, Herrin~on & Sutcliffe to serve as bond counsel . and Stone & Youngberg to serve as underwriters for the District. The appraiser needs two months of t~me " to gather information on the project and the parcels in order to properly value their worth for a bond issue transaction. The quality of their work is essential in protecting the interests of the City as the City · involves itself in the bond transaction. - PROCESS: Recently, Staff circulated a request for qualifications to specific firms who have expertise as in appraising land for assessment district bond issues. The RFQ contained detailed information about the District including a copy of the report by Public Finance Associates that discusses the various financing options available for the District. We received two proposals from the circulated request for proposals. Staff discussed the service proposals with the Bond Underwriter (Stone & Youngberg) and the prospective Disclosure Counsel. It is recommended that we hire Smyers Appraisal as the appraiser. The firm of Smyers Appraisal, with offices in Walnut Creek, has been exclusively involved in the appraisal of real estate over the past 27 years. The firm's work includes recent assessment district appraisals for the communities of San Ramon, Antioch and Pleasant Hill. Their references were very complimentary of their services, e~specially in regards to their timeliness. Their proposal clearly states that they could provide a preliminary value summary within six weeks of being directed to proceed and a final appraisal document two weeks following. Smyers *Appraisal provided a sample appraisal report that clearly demonstrated their ability and thorou,,~mess that is necessary for the assessment district work. Their work demonstrates that they have extensive experience and a good understanding of the real estate issues affecting assessment district bonds. The principal appraiser to be assigned to our project is a certified Member of the Appraisal Institute CMAI"). RECO1VIMENI)ATION: Adopt the attached Resolution to engage Smyers Appraisal as the Appraiser for the Dublin Ranch Assessment District and authorize Staff to execute a non-contingent contract for $19,000 for the related services. RESOLUTION NO. - 99 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN AUTHORIZING STAFF TO ENGAGE SMYERS APPRAISAL AS THE APPRAISER FOR THE DUBLIN RANCH ASSESSMENT DISTRICT AND TO NEGOTIATE A CONTRACTUAL AGREEMENT FOR SUCH SERVICES WHEREAS, the City recently issued a Request for Qualifications (RFQ) for Appraisal Services (Services) for the Dublin Ranch Assessment District to four firms providing such services; and WHEREAS, two rirms responded with proposals to provide the Services as discussed in the City's RFQ; and WHE~AS, Staff reviewed the proposals and determined that the proposal received from Smyers Appraisal best meets the needs of the City in completing the prospective bond financing; and NOW, THEREFORE, BE IT 'RESOLVED that the City Council of the City of Dublin does hereby authorize Staff to engage Smyers Appraisal as the appraiser for the Dublin Ranch Assessment District and authorize the City Manager to execute a non-contingent contractual agreement with the firm for an amount not to exceed $19,000. PASSED, ,&PPROVED AND ADOPTED this 19th day of October, 1999. AYES: NOES: ABSENrr: ABSTAIN: ATTEST: Mayor City Clerk G/Dublin Ranch Assmt Dist/reso-disclosure counsel ATTACHMENT smyersap_praisal real estate appraisal and consulting October 5, 1999 Mr. Joe Aguilar City of Dublin 100 Civic Plaza P. O. Box 2340 Dublin, CA 94568 HNANCL: DEPT. R[C[tVED Re: DUBLIN RANCH ASSESSMENT DISTRICT 1999-1 - APPRAISAL PROPOSAL Dear Mr. Aguilar: Thank you for the opportunity to present this proposal to prepare an appraisal which will address the market value of the development land to be included in the Dublin Ranch Assessment District 1999-1. I understand that the appraisal will be used in support of the Assessment District financing, which will fund public land development infrastructure for approximately 600 acres known as Dublin Ranch, which is part of the Eastern Dublin Specific Plan Area. The appraisal will recognize the fact that the 600 acres to be included in the District will be developed over'a period of tirne. I understand that a specific development plan has been submitted to the city regarding the first 300 acres identified as Vesting Tentative Map Tract 7148. This map calls for the development of public uses including schools and open space, a retail center, office and residential uses, high and medium density residential development, and a campus office development, These 300 acres are located immediately north of Interstate 580, west of Tassajara Road. The remaining 300 acres is immediately east of the first 300~acre Phase 1 development and is identified in the Specific Plan as Area B and Area C. The Specific Plan calls for campus office development and medium to high density residential development on ~ds site. The appraisal I propose to present will address the retail value of the development parcels and a bulk sale value recognizing the single ownership nature of this property. The values generated will consider the land as though vacant as well as improved, benefiting from the planned infrastructure to be funded by the District The bulk sale analysis will necessarily include a discounted cash flow model which will address the future sale and development of the land, and will take into consideration all fees and costs required to bring the land to a marketable product. In support of the market absorption assumptions used in the cash flow model, the appraisal will address the supply and demand for the planned development products and include an absorption analysis for each product type. 1870 Olympic Blvd., Ste. 105 Walnut C_~eek, CA 94596-5013 925.947.1140 FAX 925. ATTACHMENT 2 Joe Aguilar Appraisal Proposal October 5, 1999 Page 2 The appraisal will also look to the market for sales of large tracts of land purchased for similar types of development. It will also consider any prior transactions regarding the subject property or adjacent properties, and will take into consideration the value contribution of the planned District improvements. Other specific issues that will be addressed in the appraisal are lands to be set aside for wetlands mitigation and future restrictions on sewer capacity, which may impact the marketability and ultimately the value of future phases. As required in your Scope of Services, I will be able to prepare a preliminary value schedule that will be supported by a cash flow model or other documents as needed. The appraisal will be prepared in a self-contained narrative format and will comply with the requirements of your Scope of Work, including documentation of sales and other data used in the analysis and a list of contacts and persons interviewed for the purposes of this appraisal. The appraisal will be prepared by myself, Jesse B. Smyers. A statement of my qualifications is attached. I have been exclusively involved in the appraisal of real estate over the past 27 years. During the past 10 years, I have been engaged in the appraisal of development land for assessment district purposes on many occasions. This includes work for the City of Tracy, the City of Amtioch, the City of Alameda the City of Richmond, the Association of Bay Area Governments (ABAG) and others. Projects similar to the Dublin Ranch Assessment District include: Windemere Ranch Assessment District 1997-1 This is a proposed development of 2,320 acres in San Ramon, CA, to include a range of land uses including commercial, medium and low density residential homes. The amount of this financing was $13 million. The project manager here was Alan Almra of Almra & Nelson and his address and phone number is attached. A copy of this appraisal is attached to this proposal. CornmuniW Facilities District-1. Citv of Pleasant Hill This recently completed project was a $14 million fmancing to accommodate a new retail development in the older downtown area of Pleasant Hill. The project encompassed approximately 20 acres. The managing director for this project was Mark A. Curran at Piper Jaffray Inc. and his name and phone number is attached. smyers ap_praisa! real estate appraisal and consulting Joe Aguilar Appraisal Proposal October 5, 1999 Page 3 Assessment Districts 27 and 31. City of Antioch This recently completed appraisal addressed the value of 1,054 acres of commercial and residential land in southeast Antioch. This project involved the financing of approximately $30 million. The project manager for this financing was Craig L. Bettencourt, Vice President, Prager, McCarthy and Sealy and his address and phone number is attached. I have reviewed the Scope of Work included in your request for a proposal dated September 22, 1999. I have no known conflicts in this matter and believe I can complete the required services in a timely manner. My fn-m carries $1,000,000 of Errors and Omission insurance and $1,000,000 in General Liability insurance. This firm has never been subject to any licensing MSRB or SEC enforcement proceedings. Included below are three city references as requested: John D. Tasker Director of Finance City of Antioch P. O. Box 5007 Antioch, CA 9453 1-5007 (925) 779-7056 Mark A. Curran Managing Director. Piper Jaffray, Inc. 345 California Street, Suite 2200 San Francisco, CA 94104 (415) 984-5139 William R. Galstan City Attorney City of Antioch P. O. Box 5007 Antioch, CA 94531-5007 (925) 779-7015 Zane Johnston Finance Director City of Tracy 325 East 10m Street Tracy, CA 95376 (209) 831-4131 Clark J. Howatt Financial Sen4ces Manager Association of Bay Area Governments 101 Eighth Street Oakland, CA 94607-4756 (510) 464-7932 Richard Ricci Director of Finance City of Pleasant Hill 100 Gregory Lane Pleasant Hill, CA 94523 (925) 671-5219 (;"h smyers ap_praisat real estate appraisal and consulting Joe Aguilar Appraisal Proposal October 5, 1999 Page 4 Craig L. Bettencourt Vice President Prager, McCarthy & Sealy One Maritime Plaza, Suite 1000 San Francisco, CA 94111 (415) 408-1900 Alan R. Altura, President Almra & Nelson Company 18 Crow Canyon Court, Suite 350 San Ramon, CA 94583 (925) 83 1-0600 Warren Miller Stone & Youngberg 50 California Street, 35th Floor San Francisco, CA 94111 (415) 981-1314 The following is my proposal to prepare the above described appraisal: Total Fee $19,000 Timing - I will be able to deliver a preliminary value summary as requested within six weeks of your authorization to proceed. I can deliver the completed document within eight weeks of your authorization to proceed. Thank you for the opportunity to present this proposal. I can be available for a personal interview if necessary and any other meetings required to complete this task. Very truly yours, ~A,C~2'~__--~ Jesse B. Smyers, MAI JBS:cg Eric. smyers ap_praisal real estate appraisal and consulting JESSE B. SMYERS, MAI 1870 Olympic Boulevard, Suite 105 Walnut Creek, CA 94596 (925) 947-1140 EXPERI~,NCE Mr. Smyers has 26 years experience as a real estate appraiser. Appraisal assignments have covered a wide range of existing and proposed properties, including residential developments, offices, industrial, retail, raw acreage and special purpose properties. In recent years, he has often testified in court as an expert wimess with regard to real estate value. 1985 to Present President Smyers Appraisal Inc. (formerly Fordiani, Smyers & Associates Inc.) 1983 to 1985 Vice President/Manager, Cgmmercial Appraisal Dept. American Savings and Loah Association 1979 to 1983 Associate Appraiser The Fordiani Company 1972 to 1979 Associate Appraiser Contra Costa County Assessor's Office EDUCA~ON Graduate, University of California at Davis in 1969 with a Bachelor degree in Economics. ApDraisal tnstimte Courses: Real Estate Appraisal Principles Capitalization Theory & Techniques (A & B) Case Studies in Real Estate Valuation Standards of Professional Practice Real Estate Investment Analysis Investment Analysis Subdivision Analysis Valuation of Syndicated Property and Partnership Interests The Money Market and its Impact on Real Estate Contemporary Appraising of income Properties Easement Valuation Report Writing The Dynamics of Office Building Appraisal smyers ap_praisa! real estate aplDraisal and consulting Jesse B. Smyers EDUCATION (coni'd) California State Board of Equalization Course II Residential Cost Estimating Course III Market Approach to Value Course IV Income Approach to Value International Rimht-of;Wav Association Course: Appraisal of partial Acquisitions - Course 401 TEACHING, SPEAKING AND PUBLICATION Instructor, Diablo Valley College, Real Estate Appraisal II, 1993 & 1994 instructor, Appraisal institute Seminar on Eminent Domain, 1995 Speaker at the Valley Seminar, April '1982 - "Small Office Building Appraisal" Article Published: "Diminution in Value of Single F,amily Homes" Conira Costa Lawyer, Janukry 1995 PROFESSIONAL CREDENTIALS ADpraisal Institute, MAI - Certificate No. 6594 Chapter Offices: Board of Directors 1990-1992 Chapter Committees: Re~onal Committees: Admissions, Chairman 1989, 199I Communication Development, Chairman 1983 Education, Chairman 1988 Seminars, Chairman 1995 Re~onal Professional Standards Experience Review Committee National Committ~s: National Board of Examiners PROFESSIONAL CREDENTIALS (cont'd) Certified General Real Estate Appraiser - State of California No. AG004147 Real Estate Broker - State of California Member - The International Right-of-Way-Association U. S, District Court, San Francisco, CA Superior Court, Alameda, Contin Costa and Sotano Counties, CA Federal Bankruptcy Court, Las Vegas, NV; Oakland, CA Arbitration hearings and numerous depositions smyers ap_praisal real estate appr~_is~l and consulting City of Dublin Request for Qualifications Appraisal Services September 22, 1999 Dublin Ranch Assessment District 1999-1 Introduction The City of Dublin wishes to pursue the issuance of assessment district bonds in order to finance certain public improvements in the eastern portion of the City known as Dublin Ranch. Please review the attached exhibits for background on the transaction. The City intends to employ the services of a consultant to provide an appraisal for reliance in the issuance of assessment district bonds. The City may terminate the sen?ices of the appraiser without cause at any time. The City is utilizing the firm of Orrick Herrington & Sutcliffe (Sam Sperry) as bond counsel. It is the City's intent to execute a negotiated sale of assessment district bonds with the investment banking firm of Stone & Youngberg. The appointment of disclosure counsel has not been made as of the date of this document. The request for qualifications is only being sent to a few specific individuals and firms. Please note and observe the limitation on contacting city representatives set forth on page 4, hereof, under the heading "Points of Contact". Background Municipal services are provided within the City of Dublin's boundaries by the City of Dublin and Dublin San Ramon Services District "DSRSD". DSRSD, which is organized under the State of California Community Services District Law, is responsible for providing water, reclaimed water and sewer services. The City provides all other services. · In May 1992, the City adopted the Eastern Dublin Specific Plan. The Specific Plan was subjected to an unsuccessful legal challenge and unsuccessful voter referendum. The Specific Plan Area totals 3,302 acres, approximately 2,238 acres of which have already been annexed to the City. In the Specific Plan Area and in the annexed portion of the Specific Plan Area, there .are multiple property owners. The two largest property owners in the Specific Plan Area are Chang Su-O-Lin, who owns 1,556 acres in the Specific Plan Area including approximately 1,367 acres within the annexed portion of the Specific Plan Area; and the Alameda County Surplus Property Authority (ACSPA), which owns 700 a~es in the armexed portion of the Specific Plan Area. During the past year, the Alameda County Sinplus Property Authority (ACSPA) has been selling and developing portions of its property for industrial, residential and commercial uses. The County has approached icing infrastructure on a pay-as-you-go basis, by installing infrastructure or paying development and impact fees to the City (Traffic Impact Fees, Public Facility Fees, Freeway Interchange Fees and Fire Impact Fees) and utility connection fees to Dublin San Ramon Services Disirict. ATTACHMENT 3 City of Dublin Request for Proposal September 22, 1999 Page 2 Recently, representatives of the largest property owner (Chang Su-O-Lin) have requested that the City establish an assessment district to finance backbone infrastructure for an area encompassing 600 acres of their property holdings. The request includes a list of suggested improvements and proposed boundaries for the assessment district. The City has initiated proceedings for the assessment district formation and is presently reviewing a draft engineer's report for finalizing the district formation. Financing Structure The City anticipates that the assessment district may initially issue $30 to $45 million of bonds for the first phase of improvements. A subsequent bond transaction may be completed in 2 to 4 years after the initial bond issue in order to install the remaining assessment district improvements. Completion of the bond issue is tentatively contemplated for February 2000. Scope of Services The appraiser will perform the following duties: Prepare a market'value appraisal, which Will serve as a basis for determining value-to-lien ratios for the proposed 1915 Act assessment district. The estimate of market value should be refined to reflect the "retail value" of the fully improved and occupied properties and the "bulk sale value" of all vacant properties, both unimproved and improved or partially improved but unoccupied properties. Include a discounted cash flow analysis for the "bulk sale valuation". The analysis should include an absorption study to estimate how quickly properties can be~.developed and sold to end-users. The expenses of converting raw land to finished product or improved lots must be deducted from gross cash flow to derive net cash flow prior to discounting. The discount rate should reflect the rates of return needed to attract debt and equity participation in the project. If applicable, include the "sales comparison" approach to render a bulk value. If possible include an analysis of large bulk sales or at minimum a discussion of large tract land sales as a reasonableness check for the bulk value rendered by the discounted cash flow analysis. Render a schedule of preliminary values including both the "retail" and "bulk" appraised values. The values will be presented in a matrix arranged by assessor parceI number, or by other acceptable to the City, and will include the owner's name, size, land use, value estimate, value per unit (gross acre, net acre, etc.), by the date specified herein. Please include support for the preliminary value estimate including the draft discounted cash flow analysis and the supporting assumptions. Make a personal inspection of the subject properties including; if applicable, all improvements, slructures, appurtenances, or other elements of-value thereon which are recognized appraisal standards. Relative to land use issues, contact and/or meet with the appropriate governmental agencies, including~ but not limited to the Planning and Utilities Departments, DSRSD, LAVWMA, Army Corp of Engineers or any other agency that the APPRAISER believes would have jurisdiction over the land uses on the subject property. City of Dublin Request for Proposal September 22, 1999 Page 3 The appraisal report shall be a self-contained full narrative appraisal in conformance with USPAP and, if applicable, the Appraisal Standards for Land Secured Financing as prepared by the California Debt Investment and Advisory Commission. In addition to any applicable requirements set forth in the California Debt Investment and Advisory Commission, please insure that the report contains the following: A statement of all factors taken into consideration by the APPRAISER believed to influence, either favorably or unfavorably, the bulk market value of properties in the subject area; together with statement concerning the activity of the real estate market in the immediate and surrounding area during the past few years and the statement of current market conditions. b. Include a section in the report indicating names, phone numbers of market professionals, which you have relied on in determining or supporting assumptions or value estimates. Please include a brief summary of your conversations as they relate to key valuation issues, i.e., yield rates, cost issues, etc. c. A map of the proposed district. d. A statement as to whether or not the properties or any portion thereof is subject to special assessments; the nature, amount and number of years during which payments must be made. A statement showing all recent sales (within 5 years) of the property appraised, and a statement of all sales of comparable property which the Appraiser has taken into consideration in estimating the retail and bulk market value of the subject properties. The statement covering sales of comparable properties shall indicate the factors of comparability and shall set forth, among other items, the names of the grantor and grantee, a description of the property and its condition, date of transfer, price and terms, place of recording the conveyance, a map or diagram or other information indicating the location of such sales in relation to the subject property, a photograph, and the name(s) of continning parties with date of confirmation. Specified quantitative adjustments to the comparable sales, preferably in a grid format, shall be provided to the CITY, either in the body of the appraisal report itself, or under separate cover, and delivered to the CITY with the bound appraisal report. g. A statement of any and all assumptions and limiting conditions. h. Statement of the APPRAISER' S qualifications and experience. i. Certification of the APPRAISER 'S interest, present or contemplated, in the property. Att~,znd meetings and conference calls as requested by the City. Content of Proposals The proposal must include the following information: 1. Name, title and phone number of the principal contact for this proposal. f City of Dublin Request for Proposal September 22, 1999 Page 4 Describe the background and experience of the individuals to be assigned to the engagement, especially in regards to new money development land secured financing. Identify the anticipated responsibility of each individual and who will serve as back-up to the primary appraiser on the deal in case of schedule conflicts. Describe the experience of the assigned individuals and the finn with similar projects. Please note the issuing agency, the size of the transaction, type of assessment district, the project name, number of acres, number of property owners and the managing underwriter. 4. A statement indicating the firm's understanding of the scope of services and its commim~ent to provide such services and that it does not have any conflicts for this matter. 5. A statement indicating that the firm carries at least $1 million of errors and omission liability insurance and $ lmillion of general liability insurance. 6. A statement indicating whether or not the firm has ever been subject to any licensing, MSRB or SEC enforcement proceedings. Provide a sample appraisal report on a similar land based fmancing where the prospective appraiser was primarily responsible for the completion of the document. It is the City's expectation that the prospective report be as clear, concise and succinct as possible. 8. Provide at least three city client references in providing appraisal work. Please note the name, title, phone number of the contact person along with the project name and date of the appraisal report. Compensation for Services The compensation for the contemplated services will be paid for on a non-contingent basis. In preparing a price in response to the City's RFP, please provide a price for the following two scenarios: 1. Planning development standards of Zone 1 (first phase of development), will be in place at the time of bond sale. 2. The parcel map and pining development standards of Zone 1 (first phase of development), will be in place at the time of bond sale. Selection Criteria Proposing individuals and their firms will be evaluated based on the selection criteria below. Cost will not be an overriding factor in the selection of the fn-rn. Experi~-mce and availability of the specific attorney(s) to be assigned to the engagement and experience of the person assigned to supervise and gnide the disclosure requirements for the official statemcmts and continuing disclosure program. .. · The mount of significant experience (in years) in California land secured public finance; City of Dublin Request for Proposal September 22, 1999 Page 5 · Ability to meet the timeframes for consummating the transaction within 90 days of the award of the contract by the City Council; · Assign appropriately licensed personnel who are able and willing to serve in the City's best interest and have experience related to the financing. Points of Contact The City' s sole points of contact for this RFQ will be City Manager Richard C. Ambrose, bond counsel Sam Sperry, Interim Administrative Services Director, Joe Aguilar, bond underwriters Scott Solters and Warren Miller. Contact with other staff members and City officials, including City Councilmembers, may result in disqualification of the firm in the selection process. Deadline for Proposals Friday, October 8, 1999, 4 PM (faxes are acceptable with originals following next business day) Deliver Proposals (three copies) to: For additional information, contact: Attention: Joe Aguilar City o f Dublin 100 Civic Plaza P.O. Box 2340 Dublin, Ca. 94568 Phone (925) 833-6640 Fax (925) 833-665 1 Joe Aguilar (925) 833-6640 Richard Ambrose (925) 833-6650 Sam Sperry (415) 773-5467 Warren Miller (415) 445-2328 Scott Sollers (415) 445-2323 City staff will be making a recommendation for consideration at the October 19, 1999 City Council meeting. Attendance of the recommended firm at the City Council meeting is desirable.