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SCOPE OF WORK AND FEE
PROPOSAL
CITY OF ANAHEIM
OCV!BE PROJECT
CFD SPECIAL TAX CONSULTING SERVICES
September 9, 2022
www.FinanceDTA.com
100 Bayview Circle, Suite 100
Newport Beach, CA 92660
CITY OF ANAHEIM
CFD SPECIAL TAX CONSULTING SERVICES
OCV!BE PROJECT
SEPTEMBER 9, 2022
Prepared for:
City of Anaheim
Public Works Department
200 S. Anaheim Blvd., Suite 276
Anaheim, CA 92805
TABLE
OF CONTENTS
SECTION PAGE
I SCOPE OF WORK ................................ ....................... 1 A Phase I: CFD Analysis................................ ....................... 1 B Phase II: Annexation to Existing CFD No. 08-1 ............ 1 C Phase III: Formation of Overlay CFD ............................. 3 D Phase IV: CFD Issuance of Bonds................................ ... 5 II FEE SCHEDULE ................................ .......................... 7 A CFD Analysis, Annexation, and Formation ................. 7 B CFD Issuance of Bonds ................................ ................... 8 C Limitations ................................ ................................ ........ 8 1 SECTION I
SCOPE OF WORK
City of Anaheim September 9, 2022
Proposal for CFD Special Tax Consulting Services
www.FinanceDTA.com
I SCOPE OF WORK
This proposed Scope of Work has been designed to provide a high level of professional and technical support to the City of Anaheim (the “City”) to fund public improvements through Community Facilities District (“CFD”) financingfor ocV!BE(the “Project”). The specific activities and tasks to be performed by DTA under this Scope of Work shall consist offour (4) phases, as listed below.
A Phase I: CFD Analysis
Task 1 – Background Research
DTA will review available planning, engineering, development absorption, and financial information regarding the Project, including the Project’s Specific Plan(if any), Development Agreements, and other Project documents. All information shall be provided by thedeveloper and/or its consultants. DTA shall base its analysis on data received from these sources and will not conduct any independent research to verify the accuracy of such data.
Task 2 – Maximum Bonding Capacity Analysis
DTA shall determine the maximum bonding capacity for the existing CFD No. 08-1 when including the new annexation as well as the bonding capacity forthe proposed overlay CFD.
DTA will utilize data obtained from Task 1.
B Phase II: Annexation to Existing CFD No. 08-1
The scope below relates to the process to annex property located in the Project to the City’s existing CFD No. 08-1.
Task 3 – Updated CFD Report
DTA will prepare an updated version of the Public Report for CFD No. 08 -1 which will incorporate the annexation, and shall contain a description and the estimated cost of the proposed public facilities to be financed by the CFD, estimated bonded indebtedness and related issuance costs and incidental expenses, and an explanation of the special tax apportionment methodology.
Task 4 – CFD Annexation Boundary Map
This task entails the preparation of the CFD annexation boundary map pursuant to the requirements of the Mello -Roos Act and County of Orange (“County”) Recorder’s Office, assuming that computerized base maps are provided by the City or Project proponents. The boundary map will describe the property to be subject to the special tax. When finalized, and as requested, DTA will prepare mylar and black line originals of the boundary map and coordinate execution of the signature blocks and recordation. 2 SECTION I
SCOPE OF WORK
City of Anaheim September 9, 2022
Proposal for CFD Special Tax Consulting Services
www.FinanceDTA.com
Task 5 – Preliminary Tax Spread Analysis
We shall update the spread of special taxes (the “Tax Spread”) from Phase 1 to determine supportable bonded indebtedness. The Tax Spread analysis will focus on:
Debt Service Coverage : Calculate the aggregate debt service coverage ratios for the bonds and estimate the coverage produced from developed and undeveloped property categories; and
Bond Sizing and Structure: Coordinate with theCity and itsfinance teamregarding the structure and sizing of bonds to establish an optimal schedule of bond sales to maximize funding capacity and alleviate cash flow constraints, including an analysis of level and increasing debt service, sales of multiple series of bond issue s, trade-offs between capitalized interest and bond-financed facilities, required reserve funds, and escrowed bond proceeds, if applicable.
If requested, DTA will prepare additional Tax Spreads based on varying land use types, absorption, interest rate, bond phasing and structuring, and other assumptions. DTA shall prepare Tax Spread revisions until all parties are satisfied.
Task 6 – Registrar of Voter’s Certification
DTA will request from the County Registrar of Voters confirmation of registered voters’status for those individuals residing in the boundaries of the annexation area prior to the adoption of the Resolution of Intention (Government Code Section §53322).
Task 7 – Document Review and Preparation
DTA shall assist the Cityand itsfinance teamin the review of legal and bond documents for the annexation, including the Resolution of Intention and Resolution of Formation, and assist participating parties in executing such agreements, as needed.
Task 8 – Notice of Special Tax Lien
DTA willprovide a list of Assessor’s parcels to be attached to the Notice of Special Tax Lien and coordinate its recordation with the County pursuant to the Streets & Highway Code §3114.5.
Task 9 – General and Technical Assistance
We shall answer questions and pro vide technical advice to the City and its finance team regarding the CFDannexationduring the period in which Tasks3-8 are being completed.
Task 10 – Meeting
DTA shall attendup to one (1)in-person meetingfor this phase. This meetingmay be used to discuss or present the Tax Spread(s),updated CFD Report, or other items prepared by DTA.It may also be used for the protest hearing or other public meeting(s). After DTA has attended a total of one (1) in-person meeting for each phase for Phases II, III, and IV herein, additional meetings will require fees beyond the maximum budget establishedif the agreed-upon total fee amount has been completely expended based on the hourly rates quoted herein. DTA shall 3 SECTION I
SCOPE OF WORK
City of Anaheim September 9, 2022
Proposal for CFD Special Tax Consulting Services
www.FinanceDTA.com
also provide verbal assistance to the City and its finance team, as necessary.
C Phase III: Formation of Overlay CFD
DTA shall provide special tax consulting services necessary to assistthe City in the formation of a CFD for the Project. The tasks listed below represent work completed through the Resolution of Formation for the CFDbut do not include the actual issuance of CFD bonds.
Task 11 – Property Tax Research
DTA shall r equest Assessor’s Parcel Number (“APN”) or property tax bills from the representatives for the Project in order to identify the existing property tax rate, special taxes, and assessments. DTA shall utilize this information to identify the base property tax rate forthe purposes of modeling theprojected total effective tax rate.
Task 12 – Preliminary Tax Spread Analysis
We shall update the spread of special taxes (the “Tax Spread”)from Phase 1 to estimate CFD revenues and expenses, determine supportable bonded indebtedness and the special taxrates required to fund desired public improvements, and estimate effective total property tax rates.
The Tax Spread analysis will focus on:
Effective Tax Rate: Estimate effective total tax rates for the Project to ensure compliance with the City’s approved CFD policies;
Debt Service Coverage : Calculate the aggregate debt service coverage ratios for the bonds and estimatethe coverage produced from developed and undeveloped property categories; and
Bond Sizing and Structure: Coordinate withthe City and itsfinance teamregardingthe structure and sizing of bonds to establish an optimal schedule of bond sales to maximize funding capacity and alleviate cash flow constraints, including an analysis of level and increasing debt service, sales of multiple series of bond issues, trade -offs between capitalized interest and bond-financed facilities, required reserve funds, and escrowed bond proceeds, if applicable.
If requested, DTA will prepare additional Tax Spreads based on varying land use types, absorption, interest rate, bond phasing and structuring, and other assumptions. DTA cashflows shall providethe special tax structures necessary to support proposed financingby utilizinga variety of combinations of tax levels to be applied to various land use types. These cashflows will allow City staff to evaluate alternative special tax scenarios to determine the most politically attractive set of tax rates. DTA may recommend alternative techniques to apportion special taxes to enhance Project feasibility.DTA shall prepareTax Spreadrevisions until all parties are satisfied.
4 SECTION I
SCOPE OF WORK
City of Anaheim September 9, 2022
Proposal for CFD Special Tax Consulting Services
www.FinanceDTA.com
Task 13 – Rate and Method of Apportionment (“ RMA”) of the Special Tax (the Special Tax Formula)
DTA will prepare the RMA that will document the special tax formula, maximum special tax rates, classification of property forthe purposes of the annual levy, prepayment methodology, etc. All such components of the RMA will be structured so they are consistent withthe City’s approved CFD policies. The RMA will be designed to adapt to changes in land use, densities, and absorption.
Task 14 – CFD Report
DTA will prepare thePublicReport, which shall contain a description andthe estimated cost of the proposed public facilities to be financed by the overlay CFD, estimated bonded indebtedness and related issuance costs and incidental expenses, and an explanation of the special tax apportionment methodology.
Task 15 – CFD Boundary Map
This task entails the preparation of the CFDboundary map pursuant to the requirements of the Mello-Roos Act and County Recorder’s Office, assuming that computerized base maps are provided by the City or Project proponents. The boundary map will describe the property to be subject to the special tax. When finalized, and as requested, DTA will prepare mylar and black line originals of the boundary map and coordinate execution of the signature blocks and recordation.
Task 16 – Registrar of Voter’s Certification
DTA will request from the County Registrar of Voters confirmation of registered voters’ status for those individuals residing in the boundaries of the CFD prior to the adoption of the Resolution of Intention (Government Code Section §53322).
Task 17 – Document Review and Preparation
We shallassist the City and itsfinance teamin the review of legal and bond documents for the formation of the CFD, includingthe Resolution of Intention and Resolution of Formation, and assist participating parties inexecuting such agreements, as needed.We will also providethe necessary data and advice tobond counselregarding the implementation of theoverlay CFD, including policies that address changes in land uses that occur after district formation, integrationof reimbursement programs from the State, or other public districts or fee programs.
Task 18 – Notice of Special Tax Lien
DTA will provide a list of Assessor’sparcels to be attached to the Notice of Special Tax Lien and coordinate its recordation with the County pursuant to the Streets & Highway Code §3114.5.
Task 19 – General and Technical Assistance
We shall a nswer questions and provide technical advice to the City and its finance team regarding the CFD formation during the period in which Tasks10-19 are being completed. 5 SECTION I
SCOPE OF WORK
City of Anaheim September 9, 2022
Proposal for CFD Special Tax Consulting Services
www.FinanceDTA.com
Task 20 – Meeting
DTA shall attendup to one (1)in-person meetingfor this phase. This meetingmay be used to discuss or present the Tax Spread(s), RMA, CFD Report, or other items prepared by DTA.It may also be used for the protest hearing or other public meeting(s). AfterDTA has attended atotal of one (1)in-personmeetingfor each phase for Phases II, III, and IV herein, additional meetings will require fees beyond the maximumbudgetestablishedif the agreed-upon total fee amount has been completely expended based onthe hourly rates quoted herein. DTA shall also provide verbal assistance tothe City and itsfinance team, as necessary.
D Phase IV: CFD Issuance of Bonds
DTA shall provide the special tax consulting services necessary to assist the City with the issuance of CFD bonds for the Project, as detailed below.
Task 21 – Revisions to CFD Tax Spreads
We shall prepare revised CFD proformas as needed, up to a total of5 additionalproformasper bond issue(including those preparedin prior phases), for the Project.
Task 22 – Value-to-Lien Analysis
Utilizing information contained in the market absorption study and appraisal,DTA willprepare value-to-lien ratio estimates by special tax class to assist in identifying bond underwriting issues and the timing of bond issues.
Task 23 – Bond Documents
We will assist the City and its finance team in the preparation and review of legal and bond documents for t he CFD bond issuance, including the Bond Indenture, Official Statement, Continuing Disclosure Agreements, Statement of Overlapping Debt for the Official Statement, Special Tax CoverageTables, and Sample Tax Bills.
Task 24 – Special Tax Certification
After receiving the executed Property Owner Information Certificates confirming taxable acreage and other data provided by property owner(s), DTA shall prepare and execute the Special Tax Consultant Certificate confirmingtheadequacy of special taxes to meet debt service requirements forthe bond issue.
Task 25 – General and Technical Assistance
DTA will a nswer questions and provide technical advice to the City and its finance team regarding the CFD bond issuance during the period in which Tasks22-27 are being completed.
We shall also coordinate withthe Financial Advisorand underwriter regardingthe structure of the final debt service and bond schedule, in addition to preparing thefinal CFD Tax Spread(s). 6 SECTION I
SCOPE OF WORK
City of Anaheim September 9, 2022
Proposal for CFD Special Tax Consulting Services
www.FinanceDTA.com
Task 26 – Meeting
We will attend up to one in-person meeting per bond issue (in addition to the meetings specified in the prior phases above) with the City and its finance team, and other interested parties to present and/or discuss the appraisal, market absorption study, Official Statement, Bond Indenture, or other bond documents.
7 SECTION II
FEE SCHEDULE
City of Anaheim September 9, 2022
Proposal for CFD Special Tax Consulting Services
www.FinanceDTA.com
II FEE SCHEDULE
A CFD Analysis, Annexation, and Formation
Fees for services shall be charged on an hourly basis according to the rates set forth in the fee schedule below, with invoices being submitted to theCity on a monthly basis. All work associated with Phase I-III will be performed on a time and materials basis and billed at the labor rates listed in Table 2, plus out-of-pocket expenses. Further work at that point would require additional fees to be billed at the hourly rates listed in Table 2.
Table 1: Proposed Budget
Phase
No. Phase Description Est. Maximum
Charge
Est. Maximum
Expenses
I CFD Analysis $12,000 $400
II Annexation to Existing CFD No. 08-1 $20,000 $1,000
III Formation of Overlay CFD $45,000 $2,000
Total $85,000 $3,400
Table 2: DTA’s Fee Schedule
Labor Category Labor Rate
Managing Director $230/Hour
Vice President $220/Hour
Senior Manager $210/Hour
Manager $200/Hour
Senior Associate $175/Hour
Associate $165/Hour
Senior Analyst $155/Hour
Analyst $145/Hour
Research Assistant $120/Hour
In addition to fees for services, the City shall reimburse DTA for out -of-pocket and administrative expenses by paying a charge equal to 3% of DTA’s monthly billings for labor, plus travel costs and any outside vendor payments, not to exceed the amounts shown in Table 1.
Any additional tasks and professional services beyond those described in the Scope ofWork will be billed at the hourly rates listed in Table 2.
Any additional tasks not listed in the phases listed above that are assigned by the City shall require fees above the maximum amount listed and be billed at the hourly rates listed above if the total fee listed above has been exceeded.
8 SECTION II
FEE SCHEDULE
City of Anaheim September 9, 2022
Proposal for CFD Special Tax Consulting Services
www.FinanceDTA.com
B CFD Issuance of Bonds
DTA shall be paid for its work on the issuance of bonds through a fixed fee paid upon the sale of each series of CFD bonds. The fixed fee shall be based on the magnitude of the bond issue due to the increased work and liability risk associated with larger bond issues. The fee paid to DTA shall be as follows:
Table 3: Maximum Compensation Amounts
Bond Issue Size Total Fee per Bond Issue
(Excluding Out -of-Pocket Expenses)
Less than $5,000,000 $9,000
$5,000,000 - $10,000,000 $9,000 Plus .0020 of the Amount Over $5,000,000 $10,000,001+ $19,000 Plus .0008 of the Amount Over $10,000,000 In addition to fees for services,for each bond issue,the City shall reimburse DTA for out-of- pocket and administrative expenses by paying a charge equal to 3% of DTA’s monthly billings for labor, plus travel costs and any outside vendor payments.
C Limitations
The not to exceed amounts, minimum professional fee amounts, and hourly rates apply for a 36 -month period from execution of an agreement. The maximum fees listed above assume (i) the completion of the annexation of property to CFD No. 08 -1 that is no longer than 9 months from commencement of Phase II , and (ii) the formation of an overlay CFD that is no longer than 12 months from commencement of Phase III . Therefore, additional work may b e required if the se phases are not completed in a timely manner . DTA may request an increase in the maximum feelevels at any point thereafter if total hourly billings to date exceed the maximum fee levels listed above. Other limitations within the Scope of Work that may cause higher fees are as follows:
Annual special tax administrative services;
Any work related to determining public services shortfalls or the inclusion of a services special tax within the CFD;
Any improvement areas or zones to be structured in the overlay CFD; Any additional property to be annexed not originally included in the scope above ; and
More than one in-person meeting Phase II, one in-person meeting for Phase III, and one in-person meeting per bond issue for Phase IV.
100 BAYVIEW CIRCLE, SUITE 100
NEWPORT BEACH, CA 92660
PHONE: (800) 969 -4DTA
Public Finance
Public-Private Partnerships
Development Economics
Clean Energy Bonds
www.FinanceDTA.com
B
7 SECTION II
FEE SCHEDULE
City of Anaheim September 9, 2022
Proposal for CFD Special Tax Consulting Services
www.FinanceDTA.com
II FEE SCHEDULE
A CFD Analysis, Annexation, and Formation
Fees for services shall be charged on an hourly basis according to the rates set forth in the fee schedule below, with invoices being submitted to theCity on a monthly basis. All work associated with Phase I-III will be performed on a time and materials basis and billed at the labor rates listed in Table 2, plus out-of-pocket expenses. Further work at that point would require additional fees to be billed at the hourly rates listed in Table 2.
Table 1: Proposed Budget
Phase
No. Phase Description Est. Maximum
Charge
Est. Maximum
Expenses
I CFD Analysis $12,000 $400
II Annexation to Existing CFD No. 08-1 $20,000 $1,000
III Formation of Overlay CFD $45,000 $2,000
Total $85,000 $3,400
Table 2: DTA’s Fee Schedule
Labor Category Labor Rate
Managing Director $230/Hour
Vice President $220/Hour
Senior Manager $210/Hour
Manager $200/Hour
Senior Associate $175/Hour
Associate $165/Hour
Senior Analyst $155/Hour
Analyst $145/Hour
Research Assistant $120/Hour
In addition to fees for services, the City shall reimburse DTA for out -of-pocket and administrative expenses by paying a charge equal to 3% of DTA’s monthly billings for labor, plus travel costs and any outside vendor payments, not to exceed the amounts shown in Table 1.
Any additional tasks and professional services beyond those described in the Scope ofWork will be billed at the hourly rates listed in Table 2.
Any additional tasks not listed in the phases listed above that are assigned by the City shall require fees above the maximum amount listed and be billed at the hourly rates listed above if the total fee listed above has been exceeded.