HomeMy WebLinkAboutR23390D CA4 Falcon CrestPALM DESERT REDEVELOPMENT AGENCY
STAFF REPORT
REQUEST: AUTHORIZE CONTRACT AMENDMENT NO. 4 IN AN AMOUNT OF
$220,000, TO CONTRACT NO. R23390 BETWEEN THE PALM DESERT
REDEVELOPMENT AGENCY AND COMDYN PD, LLC, FOR THE
PURPOSE OF PURCHASING A CALHFA FORWARD COMMITMENT
AND AUTHORIZE EXECUTIVE DIRECTOR TO EXECUTE
AGREEMENT.
SUBMITTED BY: CATHERINE WALKER, SENIOR MANAGEMENT ANALYST
CONTRACTOR: COMDYN PD, LLC
2800 28th STREET, SUITE 206
SANTA MONICA, CA 90405
DATE: SEPTEMBER 14, 2006
CONTENTS: CONTRACT AMENDMENT NO. 4
Recommendation:
By Minute Motion, that the Agency Board:
Authorize Contract Amendment No. 4 in the amount of $220,000 to ComDyn
PD, LLC, (Contract No. R23390) for the purpose of purchasing a Califonnia
Housing Finance Agency forward commitment;
2. Authorize the Chairman to execute the same; and
3. Authorize Executive Director to execute Agreement with CaIHFA.
Funds are available in Account No. 870-4698-466-4001.
Executive Summary
The Builder -Lock Program sponsored by the California Housing Finance Agency (CaIHFA)
allows developers to purchase forward commitments, which essentially locks in interest rates on
conventional 30-year first mortgages. It is the Agency's intention to lock interest rates for
Phases I, II, and III of the Falcon Crest single-family housing development ensuring affordability
for future buyers. The $220,000 represents the fees required by CaIHFA to lock in $12 million
for first mortgages. This cost breaks down to approximately $2,365 per unit, and will cover all
mortgages for the 93 single-family home developments.
Discussion:
The Builder -Lock Program (BLOCK) is a program in which builders/developers may purchase
forward commitments for permanent first mortgage financing for CaIHFA —eligible borrowers tied
to their construction/marketing program at single-family, new -home developments anywhere in
the state. On any day, builders/developers may lock -in, through an approved CaIHFA Lender,
Staff Report
Authorize Contract Amendment No. 4 to ComDyn PD, LLC Contract No. R23390
Page 2 of 2
September 14, 2006
an interest rate for a pool of funds for the first mortgage products available on the date of the
commitment for terms of 6, 9, or, 12 months into the future for commitment fees of 0.5%, 1.5%,
and 2%, respectively. BLOCK forward commitments may only be used for new construction. It
is the Agency's intention to lock in Phase I for 9 months, and Phases II and III for 12 months.
Interest rates will be set on the day that the reservation for the forward commitment is made.
CaIHFA Forward Commitment Recommendation
a
I 5y y'� 5 I f
�.C16+f.A�i!b Pi1.� t+I.L+ 1,. �.�+:L�i+�hadN�h514�5(�
Phase 1 $ 4,000,000 29 137,931 9 month
Phase 2 $ 4,000,000 30 133,333 12 month
Phase 3 $ 4,000,000 30 133,333 12 month
0.75%
30,000
0.75% 30,000
60,000
1.00%
40,000
1.00% 40,000
80,000
1.00%
40,000
1.00% 40,000
80,000
TOTAL: $ 220,000
Locking mortgage rates is purely discretionary at this time. However, mortgage rates have been
rising over the last year. Current rates under the CaIHFA Program are approximately six
percent (6%), or about one-half of a point below market rates. After locking in the interest rate at
approximately 6%, the Agency would recover the cost of establishing the forward commitment
within a three -eighths (3/8%) increase from the current rate (break even point). Any rise in
interest rates above 6 3/8% would represent a cost savings to the Agency. Locking the rates at
this time will reduce the amount the Agency may have to provide to maintain affordability in the
event mortgage rates continue to climb. And, also avoids the need to restrict the potential pool
of buyers to the higher end of the moderate income range.
Staff recommends approving the forward commitment with CaIHFA in an effort to ensure an
affordable rate for prospective first-time homebuyers.
Submitted by:
Catherine Walker
Senior Management Analyst
Approval:
,Jugfi McCarthy, ACM velopment
Carlos L. OrtW, Executive Director
GARDAZeth Longman\Statf Reports\Wa1keAComDyn Amend No 4 082406.doc
Department Head:
7
Dave Yrigo
Director edevelopment/Housing
Paul S. ibson, Dire for of Finance
/ / BY RDA
ON Gl • I q--W
VERIFIED BY. 466�
Original on file with City C erk's Office
Contract Purpose: Develop affordable housing on 20 AC site
Contractor's Name: ComDyn PD, LLC
Contract # / P.O. # R23390
Change Order No. 4
Contingency: YES I NO
Account No. 870-4698-466-4001
Project No.
You are hereby requested to comply with the following changes from the contract plans and specifications:
DESCRIPTION OF CHANGES DECREASE INCREASE
(Supplemental Plans and Specifications Attached) In Contract Price In Contract Price
Purchase CalHfa Forward Commitment $220,000.00
TOTALS:
NET CHANGE IN CONTRACT PRICE: $220,000.00
JUSTIFICATION:
TOTAL BUDGET FOR PROJECT: + 27,609,476.00 CONTINGENCY:
Less: Expend. & Encumb. To Date: - 27,609,476.00 Amount Approved by Council: +
Less: This Change Order Amount: - 220,000.00 Less: Prior Change Order(s): -
BALANCE OF BUDGET Less: This Change Order: -
REMAINING FOR PROJECT:-220,000.00 Balance Remaininq of Contingency: 0.00
The amount of the Contract will be (Bt. _ J) Increased by the Sum of: Two Hundred Twentv Thousand and NO/100
Dollars ($220,000.00).
This document will become a supplement to the Contract and all provisions will apply hereto, all items included above must have
required signatures as per the purchase resolution.
1. REQUESTED BY:
EXECUTIVE DIRECTOR
3. CERTIFIED
2. ACCEPTED BY:
CONTRACTOR
FUNDS AVAILABLE: 4. APPROVED BY: 9/14/06
FINANCE DIRECTOR JIM FERGUSON, CHAIRMAN Date Approved
NOTE: No payments will be made prior to Exec. Dir. and Agency Board approval 6/14/06
SECRETARY Date Approved
G RDA Lautel Knutson WPDOCS RDA F0Rh1S Amnds Chgs CcmD\n-Amndm14 apd