HomeMy WebLinkAbout1984 Journal ....
Vol. 3 No. 1
Should Mandatory Redemption Be "Mandatory"? Case Study:
New York State Public Authorities' Bond Redemption Policy
· ...Frank Paukowits and Benjamin Lonner
· .: -::
The "Stepped Coupon"--A New Method of Structuring Bond
Issues
...Arch W. Roberts and J.. Allan Rudolph
Loans-to-Lenders Revenue Bond Financing for Multifamily Rental
Housing in California
...Peter J. Ross
Tax-Exempt Commercial Paper: An Innovative Financing Technique.
...Christian McCarthy
Credit Analysis Overview: General Guidelines in the Analysis of
Municipal Bonds
...Sylvan G. Feldstein
Index to Volume 2
a publication of PANEL PUBLISHERS
~ I / 23
be to the Stepped Coupon we iii
erwhelmingly 'advantageous to , ~
market-place will be swift and i i
· -~ Loans to Lenders
Revenne Bond Financing for
~ Multifamily Rental Housing
~ in California
PETER J. ROSS
I. Overview
A. Introduction
This article describes a plan of financing whereby certain California
governmental bodies can stimulate the development of multifamily rental
housing within their respective, territorial 'boundaries through the issuance
of tax-exempt revenue bonds. In essence, 'the plan seeks to pass the. lower
borrowing costs of such issuers through to developers of multifamily rental
property. As a result, loans could be made available to developers at a rate
significantly below conventional market rates. The lower interest rates
should reduce overall project development costs and may enable developers
to charge rents which are low enough to be competitive for the area, yet
sufficient to be profitable. '-.:
B. Eligible Issuers
Eligible issuers (the "Issuers") for the loans-to-lenders program
described herein divide into three categories: (1) charter cities; (2)
PETER J. ROSS is an associate with the law firm of Manatt, Phelps. Rothenberg & Tunney,
(San Francisco office). Formerly, he was .with LeBoeuf. Lamb. Leiby & MacRae. He is a
graduate of Yale University and attended law school at Emory, in Atlanta, Georgia.
The author wishes to acknowledge theassistance of Harold E. Ro~ers, Jr., partner in Manatt,
Phelps, Rothenberg & Tunney, m the preparation of this article.
24 / Municipal Finance Journal
redevelopment agencies; and (3) the City of Los Angeles. General law cities
and counties presently are not authorized to issue bonds for multifamily
rental housing; however, both houses of the state have approved legislation
which, if signed into law by the Governor, would permit the issuance of
such bonds.
C. Eligible Housing Developments
The location, size nnd occupancy standards of the rental housing projects
to be financed-with revenue bonds may be set by the Issuer, subject to
federal tax and state law requirements. Under federal tax law, 20 percent of,
all rental units f'manced with bond proceeds must (1) be occupied by tennnts
having incomes not exceeding 80 percent of the median income for the area
as determined. ~bY HUD and (2) be avnilable at an annual rental not
exceeding 30~percen__t of the maximum annual income level of such tenants.
In the case 0_f_"targeted area projects" (as defined in Section 103A(k) of the
Internal RevenUe Code of 1954, as amended), the.20 .percent requirement
may be reduced to 15 percent. These requirements must be maintained for a
period of at least 20 years after the rental units are available for occupancy
(not after the bonds are issued). State law and local ordinances may add
further restrictions, all of which could adversely affect the ability of de-
velopers to generate sufficient rental 'income to justify development
costs---even with reduced borrowing costs.
D. General Structure
Basically, the Issuer would issue its revenue bonds and loan a major
portion of bond proceeds to one Or more f'mancial institutions (the
"Lenders"), 'to fund construction and 'permanent loans to developers of
multifamily rental housing projects (the "Developers"). Accorclingly~ two
sets of loans are involved: (1) the loan of bond proceeds to the Lenders (the
"Lender Loans") and (2) the. Lender's loans to the Developers (the
"Developer Loans"). Principal of and interest on the bonds are payable
from payments of the Lender Loans; principal of and interest on the Lender
Loans, in turn, are payable from payments of the Developer Loans.
The bonds, the Lender Loans and thc Developer Loans will have parallel
payment provisions and each will have terms of 10- 12 years. A loan with a
10- 12 year term is considered a permanent financing, yet the interest costs
of such loan are significantly less than those associated with longer term
financings. The payment schedule of each loan will be based on a permanent
amortization schedule of 30-40 years, with a balloon payment in the
tenth or twelfth year. Accordingly, the large portion of each loan will not be
due until the housing projects have been in operation for several years and
have had an opportunity to develop a positive cash flow.
1. Eligible Lenders include commercial banks, savings and loan associations, savings
banks and insurance companies.
.os Angeles. General law cities The bonds will never constitute a debt or liability of the Issuer. They are
~ issue bonds for multifamily ~ [ payable solely from the revenues and assets pledged therefor, principally
;tate have approved legislation .~[ from repayments of the Lender Loans. Although the Lender Loans
[would permit the issuance of - constitute a general obligation of each Lender, that obligation alone usually.
[ .~ is not sufficient to secure an "AAA" rating on the bonds, necessary for
marketing purposes. That-rating may be. obtained by two principal means:
~ (1) a letter of credit or similar obligation of a financial institution having an
"AAA" credit rating and/or (2) the collateralization of the Lender Loans
of the rental housing projects ~ with certain other mOrtgages or federal direct or guaranteed securities, each
set by the Issuer, subject to
r federal tax law, 20 percent of having a value substantially in excess of the relevant Lender Loans. The "AAA"
hi, St (I)be occupied by tenants rating will reduce the Issuer's borrowing costs, and this reduction will be
he median income for the area passed through to the Developer.
lble at an annual rental not
~ income level of such tenants. : II. State Bonding Authorization
fined in Section 103A(k) of the for Eligible Issuers
~), the 20 percent requirement
nents must be maintained for a A. Charter Cities
its are available for occupancy Charter cities are empowered to issue revenue bonds for multifamily
~nd local ordinances may add ? rental housing if the city charter incorporates the home rule provision of
:rsely affect the ability of de- Article XI, Section 5(a) of the California Constitution. That section autho-
iome to justify development 'rizes charter cities, in the a. bsence of any charter restrictions to the contrary,
to make and enforce all laws respecting "municipal affairs":
It shall be coml~ent in any city charter to provide that the city governed
llue bonds and loan a major thereunder may make and enforce all ordinances and regulations in res-
peet to municipal affairs, subject only to restrictions and limitations
lrde financial institutions (thc provided in their several charters and in respect to other matters
anent loans to developers of they shall be subject to geueral laws ....
velopers"). AccOrdingly, two '
proceeds to the Lenders (the The scope of a charter city's local autonomy, i.e., the definition of
oans to the Developers (the "municipal affairs," is determined by the courts on a ease-by-case basis. No
rest on the bonds are payable court has decided whether issuance of revenue bonds for muir[family housing
~1 of and interest on the Lender is a municipal affair. Under accepted analysis, the home rule grant should
? the Developer Loans. be considered sufficiently broad.
~loper Loans will have parallel Courts seem to apply a two-step approach in determining whether a
~of 10- 12 years. A loan with a charter city's local ordinance is protected by Article XI, Section 5(a). First, they
nancing, yet the interest costs examine the state and local laws to determine if any conflict exists between
~e associated with longer term them. Conflicts have been found in the following instances: where the two
n will be based on a permanent .laws were inconsistent with each other, see, e.g., $onoma County, etc. v.
ith. a balloon payment in the County of Sonoma, 23 Cal. 3d 296 (1979); where local law dul~lieated a
portion of each loan will not be state provision, see, e.g., Pil~oly v. Benson, 20 Cal. 2d 366 (1942); and where
3peration for several years and the state legislature has evidenced an intent to preempt the field, see, e.g.,
.~cash flow. Bishop v. City of San ffose, I Cal. Rptr. 56, 63 (1969); l~edevelol~ment
Agency v. City of Berkeley, App. 143 Cal. Rptr. 633 (1978). In the absence
~ings and loan associations, savings of a conflict, both the local and state law should be upheld.
· 26 / Municipal Finance Journal
In the event of a conflict, courts will then inquire into the nature of the
matter that the local law seeks to regulate. If the matter is a municipal
affair; the local law will be upheld. See $onoma County, supra. If the local
law infringes on a matter of statewide concern, the local law will be invali-
dated. See generally, David, California Cities'and the Constitution of 1879:
General Laws and Municipal Affairs, 7 H.C.L.Q. 643 (1980), Sato, "Munici-
pa!Affairs" in California, 60 Cai. L. Rev. 1055 (1972). Courts have upheld
local laws with extraterritorial effect as long as their impact upon matters of
statewide concern was not "serious." See, e.g., Weekes v. City of Oakland,
21 Cal. 3d 386 (1978) (involving a local occupation tax).
Although the California legislature has enacted a number of laws
providing for the issuance of revenue bonds for multifamily rental housing
(see, e.g., Cal. Health & Safety Code §§33750, et seq. (Deering); id.
§§52055-56), it has not evidenced an intent to preempt the multifamily
rental housing field. In at least one instance the state expressly has
recognized and preserved the right of charter cities to issue revenue bonds
for multifamily rental housing purposes. One such legislative pronouncement
appears in Section 52053(b) of the Health & Safety Code concerning the
power of local housing finance agencies to issue revenue bonds to provide
long-term mortgage financing:
[N']othing in this subdivision shall affect the authority conferred upon a
charter city by its charter to issue revenue bonds to undertake a program
of long-term mortgage financing for multifamily rental housing.
Similarly, in A.B. 665, currently awaiting the Governor's approval, the
legislature has stated:
IT]he provisions of this chapter shall not be construed to limit or other-
wise restrict the authority of chartered cities to issue bonds for the pur-
pose of financing the construction or development of multifamily rental
housing... °
In light of the above legislative expressions, a court could not' reasonably
find that the state has evidenced an intent to preempt the field of
multifamiy rental housing. Accordingly, state law cannot be said to restrict
the issuance of multifamily rental housing revenue bonds by charter cities.
In the unlikely event t-hat a conflict with state law is perceived, a court
nonetheless may uphold a local ordinance on grounds that the issuance of
revenue bonds for multifamily rental housing purposes is a "municipal
affair" protected against inconsistent state laws by the home rule grant.
Such a finding is supported by those cases which hold that the procedure
for the issuance of revenue bonds is a municipal affair. See, e.g., Fritz v.
City and County of San Francisco, 132 Cal. 373 {1901), City of Santa
Monica v. Grubb, 245 Cal. App. 2d 718 (2d Dist. 1966). See generally,
Sato, supra.at 1080..As additional support, analogy can be made to the muni-
cipal tax cases which have established a strong policy of home rule fiscal
* If signed by the Governor, A.B. 665 would enable all cities~general law and charter~to
issue revenue bonds for multifamily rental housing.
Loans-to-Lenders RevenUe Bond'Financing / 27
inquire into the nature of the . autonomy. See, e.g., Weekes v. City °fOaicland, '21 Cal. 3d 386 (1978); Ex
If the matter is a municipal parteBraun, 141 Cal. 204(1903)~
na County, supra. If the local iR The bonds of charter cities and the Projects to 'be financed therewith are
rn, the local law will be invali-
.~. subject only to federal tax law requirements, unless the charter itself or the
and the Constitution of 1879: -' local ordinance enacted .thereunder adds further restrictions. As a result of
.Q. 643 (1980), Sato, "Munich ~ this 'flexibility, charter cities are .the most desirable issuing entities of
955 (1972). Courts have upheld : revenue bonds for multifamily rental housing.
as their impact upon matters of
g., Weetces v. City of OMc/and,
~ation tax).
Redevelopment agencies are empowered to issue revenue bonds for
; enacted a number of laws multifarnily rental housing pursuant to the provisions of S.B. 99, codified at
for multifamily rental housing ~ Cal. Health & Safety Code §§33750 et seq. (Deering). The enabling
i33750, et seq. (Deering); id. language is contained in Section 33761, which provides: "'An agency may
It to Preempt the multifamily issue revenue bonds for the purpose, of financing residential construction
tance the state expressly has authorized by this chapter .... "Although not expressly provided, it is
er cities to issue revenue bonds reasonable to presume that rental housing is contemplated within the
; such legislative pronouncement definition of "residential construction." "Residential construction" refers
& Safety Code concerning the only to "residences," the definition of which' includes mUltifamily
issue revenue bonds to provide residential structures, but does not distinguish between rental and owner-
occupied dwellings. Id. §337530).
.- authority conferred upon a The housing projects financed under S.B. 99 must satisfy the occupant-
~n~ to undertake a program eligibility requirements prescribed by Sections 33760 and' 33760.5. The
unily rental housing, applicability of these requirements depends upon whether the project is
~the Governor's approval, the located within or outside a "project redevelopment area.": If the rental
project is located within a project redevelopment area, there are no
~e construed to limit or other-
.'s to issue boners for the pur- restrictions as to occupant eligibility. If the project is located outside a
opment of multifamily rental project redevelopment area, all occupants must be "eligible for financial
assistance specifically provided by a governmental agency for the benefit of
occupants of the residence." Id. §33760.
.s, a court could not' reasonably Section 33760.5 attempts to ease some of the hardships created by Section
:ent to preempt the field of 33760 for redevelopment agencies operating in jurisdictions having a
te law cannot be said to restrict population in excess of 600,000 persons. Such agencies may finance
~venue bonds by charter cities, multifamily rental housing developments outside a redevelopment project
state law is perceived, a court area for persons of low or moderate income3 provided that (1) 20 percent of
~n grounds that the issuance of the rental units are committed to lower-income households and (2) 10
zing purposes is a "municipal percent of such units are committed to very low-income households. Section
laws by the home rule grant. 33760.5 further provides that the above restrictions will not apply if federal
which hold that the procedure rent subsidies become unavailable. At present, theSespecial provisions have
icipai affair. See, e.g., Fritz v. effect only until January 1, 1983, unless extended by statute.
~al. 373 (190t), City of Santa
'2d Dist. 1966). See generally, 2. A "redevelopment project area" means a project area as defined by Cal. Health &
aa/ogy can be made to the muni- Safety Code §33320.1 for which a redevelopment plan has been adopted by ordinance pursuant
tong policy of home rule fiscal to Section 33365 of that Code. Project areas must be located in blighted areas and must be
selected by a planning commission for the community.
all cities--general law and charter--to I 3. "Low or moderate income" is del'reed as 120 percent of the area median income. Cal.
Health & Safety Code §33760.5(bi(Deering).
28 / Municipal Finance Journal
As a practical matter, it may be very difficult to finance muitifamily
rental housing developments with bonds of redevelopment.
agencies~whether or not such developments are lOCated within
redevelopment project areas. The restrictions added by S.B. 99 may severely
~ curtail the ability of a housing project to generate sufficient rental income
to justify development costs. In the case of hoUSing developments in
redevelopment project areas, the blighted conditions of such areas, may
- force rents to be too low. On the other hand, rental income from housing
· developments outside project areas will be reduced by virtue.of the more
stringent occupant-eligibility requirements.
C. City of Los Angeles
Section 52055 of the Health & Safety Code specifically aUthorizes cities
with populations exceeding 2,000,000 persons to issue revenue bonds for
multifamily rental housing. At present, only the City· of Los Angeles
qualifies. Section 52055 sets forth only one minor limitation on the housing
projects to be financed thereunder: the rental units mUst be occupied
by persons of low and moderate income.
Until December 31,1981, counties' with populations exceeding 4,000,000
persons were empowered to issue revenue bonds for muitifamily rental
hoUSing pursuant to the conditions of SectiOn '52056 of the Health & Safety
Code. The "sunset" 'provision of Section 52056, however, .was not
extended. Accordingly, Section 52056 no longer provides bonding
authorization for multifamily rental housing.
D. A.B. 66S'
At present, general law cities and counties have no bondingautho _rizati.on
for multifarnily rental housing. A.B. 665, if signed into law by the Governor,
would provide that authorization. In addition, chapter cities would be per-
mitted to avail themselves of the provisions of A.B. 665. Accordingly, A.B.
665 would moot any questions concerning the authority of charter cities to
issue revenue bonds for multifamily rental housing.
The requirements of A.B. 665 parrot those set forth in Section
103(b)(4)(A) of the .Internal Revenue Code. By .definition, then, under
current laws, a tax-exempt revenue bond for multifamily residential housing
would qualify under A.B. 665,' subject to the restrictions of A.B. 665 on
the aggregate amount of multifamily rental housing bonds which may be
issued.s
4. However, since the provisions of Section 103(bX4RA) are not incorporated by reference,
A.B. 665 would be unaffected by an easing of the restrictions for federal tax-exemption.
5. As an alternative menns of financing multifamily rental housing, A.B. 665 permits cities
and counties to contract with the California Housing Finance Agency ("CHFA") to sell the
bonds of such city or county and to operate.a progrnm to fund construction and mortgage
loans for multifamily rental housing developments within such city or county. This alternative
subjects the management and construction of all developments financed thereunder to the
supervision of the CHFA. '-~
Loans-to-Lenders RevenUe Bond Financing / 29
ifficult to finance multifamily A.B. 665 also allows cities and counties to apply not more than 10 percent
bonds of redevelopment of bond proceeds to the development of commercial property for lease?
~ments are located within Such commercial_property must be located on the same parcel as, or the
added by S.B. 99 may severely parcel adjacent to, a multifamily rental housing development. Any rents
~nerate sufficient rental income collected therefrom in exces.q of payments necessary for debt service, oper-
: of housing developments in ating expenses and required reserves must be applied to reduce the rent
conditions of such areas may charged on units reserved for lower-income and very low-income households.
~d, rental income from housing A.B. 665 limits the aggregate amount of bonds which may be issued for
reduced by virtue of the more multifamily rental housing purposes to $900,000,000. This ceiling applies
whether or not such bonds were issued pursuant to A.B. 665 or any other
provision of law, including a city charter.
By its terms, A.B. 665 would remain in effect until January 1, 1984,
de specifically authorizes cities unless extended by a later enacted statute.
ms to issue revenue bonds for
rely the City of Los Angeles E~ Local Housing Authorities
ninor limitation on the housing Local housing authorities of cities and counties created under the
ental units must be occupied Housing Authorities Law, Cal. Health & Safety Code §§34200 et seq. are
permitted to finance primarily slum clearance or loW-rent housing for persons
,opulations exceeding 4,000,000 of low income. Absent subsidization, such housing projects would not be
bonds for multifamily rental financially feasible; the rental income generated thereby could not pay
~n 52056 of the Health & Safety development costs.
on 52056i however, was not In addition, voter approval may be required for all such bonds of a local
no longer provides bonding housing agency. Under Article XXXlV of the California Constitution, state
[' public bodies are prohibited from developing, constructing or acquiring
low-rent housing projects without voter approval. Although the state
legislature has exempted from this restriction privately owned developments
have no bonding authorizatign · in which not more than 49 percent of the rental units are available to
gned into law by the Governor, persons of low income, the projects t° be financed by local housing
c)n, charter cities would be per- authorities may not fall within this exception. There is, however, greater
:)fA.B. 665. Accordingly, A.B. probability that this exception' would apply to the bonds of the other
he authority of charter cities to issuers.
ousing.
those set forth in Section F. The RentaiHousingConstructionProgram
e. By definition, then, under
The Rental Housing Construction Program, described in SectiOns 50735
multifamily residential housing et seq. of the Health & Safety Code, provides additional authority pursuant
he restrictions of A.B. 665 on
to which cities, counties and redevelopment agencies can issue bonds to
housing bonds which may be.
finance multifamily rental housing projects. However, such issuers must
first apply to and receive a commitment from the Department of Housing
}(A) are not incorporated by reference,
restrictions tbr federal tax-exemption.
' rental housing, A.B. 665 permits cities
Finance Agency C'CHFA") to sell the
km to fund construction and mortgage 6. This 10 percent limit reflects the Internal Revenue Code requirement that 90 percent
fin such city or county. This alternative ("substantially all") of the proceeds of any industrial development bond be used to provide the
,elopments financed thereunder to the exempt facility (i.e., the housing developments). ,See Treas. Reg. §1.103-8(a)(1).
30 / Municipal Finance joUrnal
and Community Development for an allocation of fUnds before such bonds
can be issued'. Accordingly, the program neither provides certain bonding
authorization for local issuers, nor, in the case of charter, cities,
meaningfully expands the already existing authority to issue, multifamily
rental housing revenue bonds.
III. Federal Tax Exemption
The tax exemption of revenue bonds for multifamily rental housing is
provided in Section 103(b)(4)(A) of the Internal Revenue Code of 1954. At a
minimum, such bonds must comply with this Section and the regulations
thereunder, regardless of any requirements imposed by state bonding acts.'
Section 103(b)(4)(A) of the Code, as amended by the Mortgage Subsidy
Bond Tax Act of 1980, permits tax-exempt financing for residential rental
property if individuals of "low or moderate" income are to occupy at least:
(1) 15 percent o'f the rental units in the case of "targeted area projects" or
.:~-.- (2) 20 percent of the rental units in the case of any other project. "Low or
~:-. moderate-income" is defined by Section 167(k)(3)(B) of the Code, which
incorporates the standards set for Section 8 of the United States Housing
Act of 1937, as income not exceeding 80 percent of the median income area
as determined by HUD. "Targeted area residences" is defined in Section
103A(k) of the Code as a residence which is in (1)a qualified census tract
(where 70 percent of the families in the tract have incomes which are 80
percent or less than the statewide median) or (2)an area of chronic
economic distress' (as designated by the state and approved by the Secretary
of HUD). Under Section 103(b)(4)(A) of the Code, this 20-percent/15-per-
cent test must be satisfied for a period of at least 20 years following the
completion of the housing project, whether or not the bonds are
outstanding.
The rental housing projects to be f'manced with tax-eXempt revenue bonds
also must qualify as "residential real property'' under Treas. Reg. § 1.103-
8(b). Thus, the housing facilities must be available for public use and
consist of complete living units, with living, sleeping, eating, cooking and
sanitation facilities, which are not used on a transient basis.
IV. Detailed Analysis of Financing
A. Financing Documents
As stated earlier, a loans-to lenders financing involves two sets of loans:
(1) the loan of bond proceeds to the Lenders, and (2) the Lender's loans to
7. The bonds also must comply with the arbitrage provisions of Section 103(c) and those
provisions which apply to industrial development bonds generally.
Loans-to-Lenders Revenue Bond Financing / 31
ion of funds beforesuch bonds the Developers. These transactions necessitate three types of financing
ither provides certain bonding doCUments: two with respect to each loan and a third with respect to the
the. case of charter cities, bonds. In addition, if a letter of credit or similar obligation is obtained as
authority to issue multifamily added security for the payment of the bonds, a fourth set of financing
documents would be required.
The following is a description of the basic documents contemplated by a
:emption multifamily loans-to-lenders financing secured by a letter of credit.
DOCUMENT DESCRIPTION
multi family rental homing is BOND (1) Trust Indenture Agreement between the Issuer and
tal Revenue Code of 1954. At a DOCUMENT trustee for the bondholders (the
lis Section and the regulations "Trustee"). Issuer agrees to repay
imposed by state bonding acts.? bonds from available funds and
aded by the Mortgage Subsidy pledges program assets and revenues
financing for residential rental to the Trustee as security.
income are to occupy at least: LETTER OF (2) Application for Application by Issuer to letter of
vf"targeted area projects" or CREDIT Letter of Credit credit bank to issue letter of
~of any other project. "Low or DOCUMENTS credit.
;7(k)(3)(B) of the Code, which
; of the United States Housing (3) Letter of Credit Agreement by letter of credit bank
unconditionally and irrevocably to
:ent of the median income area pay principal of and interest on the
fidences" is defined in Section bonds. Issued to the Trustee for the
~ in (1) a qualified census tract benefit of the bondholders.
tCt have incomes which are 80
LENDER (4) Lender Loan Agreement between Issuer and
~) or (2) an area of chronic LOAN COmmitment Lender. Lender commits to orig-
and approved by the Secretary DOCUMENTS Agreement inate, and Issuer agrees to allocate
', Code, this 20-percent/15-per- to such Lender, specified principal
at least 20 years following the amount of loans. Agreement is
:ther or not the bonds are entered into before the bonds are.
issued.
with tax-exempt revenue bonds (5) Lender Loan Agreement between Issuer and
~y" under Treas. Reg. §1.103- Agreement Le~der providing for the actual loan
available for public use and of bond proceeds. Lender's obliga-
sleeping, eating, cooking· and tion to repay the loan is evi-
[ransient basis, denced by a note which will be en-
domed by Issuer to the Trustee.
)f Financing (6) Reimbursement Agreement between Issuer and
Agreement Lender obligating Lender to reim-
burse letter of credit bank for any
draws made byTrustee under the
ing involves two sets of loans: letter of credit.
~, and (2) the Lender's loans to DEVELOPER (7) Deed of Trust Agreement by Developer to grant
LOAN a lie~ on and security interest in the
DOCUMENTS housing project to a Deed of Trust
>rovisions of Section 103(c) and those
8e-nerally' trustee on behalf of the Lender.
32 / Municipal Finance Journal
(8) Developer Note Mortgage Note by Developer tO the
Lender evidencing obligation to re-
pay the Developer Loan'.
:, (9) Regulatory Agreement between the Developer,
-.' Agreement Trustee and Issuer relating to the
permitted use of the housing de-
~:'r velopment. Regulatory Agreement
is necessary to ensure tax exemp-
tion of the Bonds.
" (10) Special Warranty Agreement by DeveloPer (i) to
· Deed and Deed comply with occupant-eligibility
Restrictions requirements fOr a period of twenty
years and (ii) to maintain property
as residential real property during
lifetime of bonds. Agreement runs
with the land and is binding upon
any subsequent owner of the
housing project.
B. The Bonds
1. General
The bonds will be issued in an amount sufficient to fund all of the Lender
Loans, to pay issuance costs, and to fund a debt service reserve fund for the
bonds. The actual size of the bond issue thus will depend upon the principal
amount of loans each Lender commits to make to Developers. The interest
rate on the bonds will be based on current rates at the time of marketing.
The obligations of the Issuer relating to the bonds will be contained in a
Trust Indenture with a qualified bank or institution acting on behalf of the
bondholders (the "Trustee"). In particular, the Trust Indenture will: (1)
pledge and assign all available funds and assets to the Trustee as security for
the bonds; (2) Create various funds through which project revenues will
flow; (3) set forth payment and repayment provisions; and (4) define events
of default under which the Trustee can draw upon the letter of credit or
other security for the bonds.
2. Security for the Bonds
The bonds are payable from and secured by three sources of revenues: (1)
repayments of the Lender Loans; (2) moneys held by the Trustee in the
various funds and accounts created under the Trust Indenture; and (3)
moneys drawn by the Trustee under the letter of credit (or other security
obligation) and/or other collateral pledged to the payment of the bonds.
The primary source of payment for the bonds is the repayments of the
Lender Loans pursuant to individual Lender Loan Agreements. The
Loans-to-Lenders Revenue Bond Financing / 33
Mortgage Note by DeVeloper to the maturity and payment provisions of the bonds and Lender Loans will be
Lender ev/dencing obligation to re- virtually identical; prepayments of the Lender Loans will trigger pre-
pay the Developer Loan. payments of the bonds.
Agreement between the Developer, In the event that payments received from the Lenders are insufficient to
Trustee and Issuer relating to the meet debt service on the bonds, the Trustee may withdraw moneys from the
permitted use of the housing de- various funds and accounts established under the Trust Indenture. The
velopmenL Regulatory Agreement Trust Indenture will Set forth the order in which such funds and accounts
is necessary to ensure tax exemp- may be so used. A Debt Service Reserve Fund.usually will be established to
tion of the Bonds. pay at least six months' to one year's interest on the bonds."
The ultimate security behind the bonds is the letter of credit or.similar
Agreement by Developer (i) to
comply with occupant-eligibility obligation from a bank having an "AAA" rating and/or collateral pledged
r~quiremen~s for a I~iod of twent~j by Lenders in the form of certain mortgage loans .Or/federal securities
years and (ii)to maintain property having a market value substantially in eXcess-of the Lender Loan. The
as residential real. property during actual collateral requirements will be dictated by the rating agencies and/or
lifetime of bonds. Agreement runs the bank.
with the land and is binding upon A loans-to-lenders financing may be structured to permit the bondholder¥
any subsequent owner of the (or the trustee acting on his behalf) to claim against the letter of. credit or
housing project, the pledged collateral, or both, in :the event of default. If the bondholders
can claim against the pledged collateral, the aggregate yield thereon is
limited by the arbitrage rules to the yield On the bonds. See Rev. Rul. 78-348
(1978). This restriction necessitates the periodic revaluation of the collateral,
since its yield continually changes. However, if the collateral is pledged
~ufficient to fund all of the Lender solely for the benefit of the letter of credit bank and the bondholders
a debt service reserVe fund for the can proceed only against the letter of credit, then the problems associated
mUS will depend upon the principal with collateral would be eliminated. This is the preferable alternative.
ake to Developers. The interest
rates at the time of marketing. 3. Funds
) the bonds will be contained in a The tYPical loans-to-lenders financing requires the establishment and
institution acting on behalf of the maintenance of the following funds:
lar,. the Trust Indenture will: (1)
·sets to the Trustee as security for FUND . SOURCE AND PURPOSE OF FUND
~ugh which project revenues will (1) Loan Fund Funded from bond proceeds and early prepayments
t provisions; and (4) define events of Lender Loans. Applied to make Lender Loans and,
~raw upon the letter of credit or after 3 years from date of the bonds, to redeem the
bonds. For convenience, Loan Fund may be divided
into (1) separate"Lender Loan Accounts" and (2)a
Contingency Account in the event a commitment to
~ . originate a Developer Loan is not full'flied.
d by three sources of revenues: (l) (2) Cost of Issuance Funded from bond proceeds. Applied to pay issuance
oneys held by the Trustee in the Fund . costs, including legal fees, printing expensesd e~c.
/er the Trust Indenture; and (3)
letter of credit (or other security
:/io the payment of the bonds. S. If the Trustee is able to draw immediately under the letter of credit or other s~curity for
le bonds is the repayments of the the bonds, the need for a Debt Service Reserve Fund may be obviated. Indeed, such Fund may
no longer be "r~asonably required" within the mean/rig of Section 103(c) of the Internal
Lender Loan Agreements. The Revenue Code. In such instance, moneys in such Fund could not be invested at unrestricted
yield, thereby causing the Fund to become superfluous.
34 / Municipal Finance Journal
(3) Revenue Fund Funded from payments and most prepayments of
Lender. Loans, and investment income from other
funds. Amounts representing prepayments of
Lender Loans are used to redeem bonds. Other
amounts are used to pay program expenses, principal
and interest on the bonds, and to fund any deficien-
cies in the Debt Service Reserve Fund.
(4) Debt Service Funded from bondproceeds in an amount sufficient
Reserve Fund to pay six months' to one year's interest on the bonds
in the event of default.
(5) Bond Fund Funded from transfers from the Revenue Fund and
Debt Service Reserve Fund. Applied to pay debt
service on the bonds. For convenience, Bond Fund
may be divided into separate Interest, Principal and
Redemption Accounts.
C. The Letter of Credit
The letter of credit would be issued to the Trustee on behalf of the
bondholders in an amount sufficient tO pay when due, total principal of,
premium, if any, and interest on the bonds. The Trustee would be entitled
to draw on the letter of credit to pay debt service on the bonds in the event
of default in the payment of a Lender Loan. Upon each draw, the letter of
credit bank would have recourse against: (1) the defaulting Lender; (2) the
collateral pledged by such Lenders; and (3) program revenues and assets
held by the Trustee. These rights would be specified in the Application for
Letter of Credit by the Issuer and in the Reimbursement Agreement
between the letter of credit bank and the Lender.
The letter of credit bank generally will charge between 50 to 100 basis
points each year for its credit. This premium is a program expense, payable
from the "spread" between the interest rate on the bonds and the interest
rate on the Lender Loans.
An alternative to a letter of credit security arrangement is a Collateral
Purchase Agreement among the Issuer, the Trustee and a financial institu-
tion having an "AAA" credit rating. Under this alternative, in the event of
a default by a Lender in the repayment of the Lender Loan, the Trustee
would have the right to sell, and the financial institution would be required
to purchase, the collateral securing the defaulted Lender Loan. The
purchase price would be an amount at least equal to the principal amount of
the Lender Loan then outstanding, plus one year's interest thereon. The
initial commitment and annual fee of such financial institution may be
lower than the fee on a letter of credit. However, the Collateral Purchase
Agreement will involve problems of valuing and revaluing collateral.
Loans-to-Lenders Revenue Bond Financing / 35
ents and. most prepayments of D. The Lender Loans
;d investment income from other The Lender Loans will be made to each Lender in an amount equal to its
representing i~repayments of commitment to originate Developer Loans. That commitment must be
! Used to redeem bonds. Other entered into prior to the issuance of the bonds since it largely will determine
~o pay program expenses, principal the size of the bond issue. As security for its commitment, each Lender will
~ bonds, and to fund any deficien-
~ice Reserve Fund. be required to pay a non-refundable commitment fee~ equal to approx-
imately 2 percent of the principal amount of its commitment. The
i proceeds in an amount sufficient commitment also will require that the Lender enter into a ~ubstan~ial
to one year's interest on the bonds binding obligation to make a Developer Loan Within six months after
~ult. issuance of the bonds. This is a requirement for the tax exemption of the
ifers from the Revenue Fund and bonds. See Treas. Reg. § 1.103-1~(b)(3).
!rye Fund. Applied to l~ay debt The Lender Loan will be made pursuant to a Lender Loan Agreement with
ds. For convenience, Bond Fund thc Issuer. That Agreement will require the proceeds of the Lender Loan to
,o separate Interest, Principal and be used for Developer Loans and will set forth the payment and prepayment
mrs. terms'° of the Loan and other agreements of the Lender. The interest rate
on the Lender Loan will be approximately five-eighths of 1 percent more
than the interest rate on the bonds. The Lender's obligation to repay the
Issuer will be evidenced by a note.
the Trustee on behalf of the Assuming a letter of credit is used to secure the bonds, each Lender would
! when due, total principal of, enter into a Reimbursement Agreement with the letter of credit bank as a
: The Trustee would be entitled condition of receiving a Lender Loan. Under that agreement, the Lender
xvice on the bonds in the event would pledge to such bank collateral in the form of certain federal securities
Upon each draw, the letter of and/or mortgages in consideration of the bank's issuance of its letter of
) the defaulting Lender; (2) the credit. As noted earlier, the requirements for the value of the pledged
) program revenues and assets collateral will be set by either the letter of credit bank, the rating agency
;peCified in the Application for for the bonds, or both, depending upon.whether the bondholders can claim
le Reimbursement Agreement against that collateral.
der.
barge between 50 to 100 basis E~ The Deveioper Loan
ils a program expense, payable
: on the bonds and the interest As the final step in the financing, the proceeds of the Lender Loans will
i be loaned to individual developers to construct multifamily rental housing
ty arrangement is a Collateral projects. Each Developer Loan will be secured by a deed of trust on the
Trustee and a financial institu- · project and will' be evidenced by .a note to the. Lender in the principal
this alternative, in the event of amount of the Loan. As noted earlier, the payment and prepayment
!the Lender Loan, the Trustee provisions of the Developer Loan will correspond to those of the Lender
il institution would be required Loan.
,defaulted Lender Loan. The The rate of interest on the Developer Loan will be approximately 1
:lual to the principal amount Of percent more than the rate of interest on Lender Loans. In addition, the
~e year's interest thereon. The Developer may be charged a loan origination fee of approximately 2
~ financial institution may be
~vever, the Collateral Purchase
md revaluing collateral.
9. The commitment fee will be refundable only if the bonds are not issued by a certain date.
or at less than a specified interest rate.
10. As noted earlier, these provisions will parallel the terms of the bonds.
36 / Municipal Finance Journal.
percent, an annual servicing fee of approximately one-eighth of I percent and
customary recording and title fees. These fees and the security interest in the
projects will inure solely to the benefit of the Lenders and not to the
bondh°lders or the Issuer.
As noted earlier, operation of the housing developments must comply with
federal law and state law requirements throughout the lifetime of the bonds
and, in the case of tenant eligibility requirements, for a period of twenty
years following the completion of the project. These requirements are enforced
by means of two documents: (1) the Regulatory Agreement and (2) the
Special Warranty Deed and Deed Restrictions. The Regulatory Agreement
is the agreement of the Developer with the Issuer and Trustee to confOrm
the rental housing projects to federal tax and state law standards. Upon
a default of that Agreement, the Issuer or the Trustee will be able to re=
- quire the Lender to accelerate payment of the deed of trust note and to
foreclose on the deed of trust. In addition, the Issuer may be able to lease
the rental units at a nominal rent.
The Special Warranty Deed and Deed Restrictions enable the
enforcement of the 20-percent/15-pereent tenant-occupancy requirement
for a period of twenty years after completion of construction. The Deed
Restrictions "run" with, and are an encumbrance on, the land and will bind
the Developer and any subsequent owner of the project.
V.. Conclusion
Although legal mechanisms presently exist under California and federal
Statutes for the issuance of municipal bonds to finance multifamily rental
housing, occupancy restrictions and unfavorable interest rates have thus far
severely curtailed the use of such financing. Hopefully, with the enactment
of more liberal legislation presently being considered, an upturn in the econ-
omy and lowering of interest rates, such multifamily rental housing finan-
cing will become more prevalent. '
MANATT, PHELPS, ROTHENBERG & TUNNEY
.......................................... LOS ANGELES, CA 90067 APR ~ ;~8~ L~HINGTO .... C. OFFICE
.............................................. CiTY A QER,S
..................................................................... OFFICE
....................................... April 7, 1982 Los ANGeles {DOWNTOWN)
............................... VI~ ME:SSENGER
Philip Kelmar, City Manager
1501 Truxtun. Avenue
Bakersfield, California 93.301
Dear Philip:
I very much appreciated the opportunity to appear
before the Budget and. Finance committee to propose that this
law firm be considered as bond counsel for your proposed
multi-family revenue bond issue. As we-discussed, the
underwriter, Bache Halsey Stuart Shields Incorporated,
would prefer that we be bond counsel since this firm has
been working with 'Bache in the develoPment of this program.
Because of the time that we have spent and the reSearch that
we have already done in this area we are prepared to move
this transaction forward immediately.
For your information, I am enclosing an article
entitled 'Loans-lt~o'-iLender~s~ Re:venue ~BOnd Fina:nci:nq ;for ·
Mul:ti:famil:y iRental' HOUsin;g: in: :Cal~ifor~ia by Peter J. Ross
of this firm which has just been published in' 'The .M~ni:c:ipal
Finance' :Journal and sets forth all of the requirements for
structuring a multi-family r.evenue bond issue. Additionally,
the article' makes reference to all of the documents that
must be prepared on behalf of the City in order to complete
the transaction. This 'law firm has already prepared in
draft form all of the documents referenced in the article
which is the reason we are prepared to immediately proceed.
I am also enclosing .for your information a copy of this firm's
resume.
{VIANATT, PHELPS, ROTHENBERG & TUNNEY
Philip Kelmar, City Manager
Page Two
April· 7, 1982
· Once again,~ let' me .thank/y6u for your time and
I will ' . Cor
look forward to hearing f.r'~-~.~.
~i~ll/~l yours,
Pet r ~./K~ly
· of a! ~ttVP~elps,
Rot e! )erg &.!Tunney
PDK:bas
Enclosures
cc: Thomas A. Reilly,
Bache Halsey Stuart Shields Incorporated (w/enc.)
MANATT, PHELPS,~F~OTHENBEF~G & TUNNEY
ATTO~::~NEYS AT LAW
DESCRIPTION
OE'
MANATT, PHELPS, ROTHENBERG & TUNNEY
I. INTRODUCTION
Manatt, Phelps, Rothenberg & Tunney is a rapidly'
growing firm of young lawyers. The firm has thirty-nine
partners, three attorneys serving as of counsel, and fifty-
seven associates, with seventeen additional lawyers joining
the firm in the spring and fall of 1982. Sixteen clerks,
from different law schools, will be spending the summer with
the firm this year. The firm has grown from seven attorneys'
in mid-1973,- and plans to continue its growth.. In the past
year the firm opened a San Francisco office, specializing in
municipal bonds, and an office, in downtown Los Angeles speci-
alizing primarily in international corporate and banking.
The firm also has a strong tradition of individual.
participation 'in community activities.~ Over the years, law-
yers in the firm have assumed significant responsibilities
in a broad range of educational, political, civic,, charitable,
professional, and social concerns.
II. NATURE'OF PRACTICE
The major areas of the firm's practice are corpor-
ate, banking, energy, securities, and tax law; corporate and
commercial litigation; entertainment and sports law; admin-
istrative law; municipal bonds and-real estate.
· MANAtt PhElPS, ROTHENBERG K; TUNNEY
January 15, 1982
Page 2
In the corporate area, the'firm commonly serves as
general corporate counsel_. In addition, it represents a
'number of clients on a specialized basis for such. matters as
registration under and compliance with federal and.state
securities laws, including registration of equity and debt
offerings and limited par.tnership syndications, proxy con-
tests, and tender offers, as well as other specialized corpo-
rate representation in the areas of mergers and acquisitions,
reorganizations and dissolutions. Among the firm's clients
in. this area are approximately'sixty, financial institutions,
ranging from small independent banks to large international
bank holding Companies and foreign bank agency offices. The
firm also represents corpOrations outside the banking area,
including corporations engaged in the exploration for and
development and production of oil and gas, as well as several
large foreign companies, including Japanese trading companies.
In the entertainment area, the firm represents
record companies, television and motion picture production.
companies, producers, directors, writers, artists and enter-
tainers, and concert promoters. In addition, the firm repre-
sents teams, leagues, and professional athletes in various
sports.
The firm's litigation department combines an excep-
tionally diverse practice with a solid emphasis on'- the devel.-
opment of the competence of its litigators. The department's
practice extends to virtually every substantive area of com-
mercial law, including contracts, business torts, securi-
ties, antitrust, and real estate. The. department's practice
includes litigation in several areas not~ always a part of a
general corporate practice: white collar criminal defense,
entertainment, and sports. New litigators are assigned a
varied caseload, work closely-with senior lawyers on large
cases, and take primary responsibility on smaller cases with
a senior lawyer participating in an advisory capacity. This
mix of cases promotes the department's dual objectives of
comprehensive training and rapid assumption of responsibility.
The firm represents clients before a variety of
administrative and regulatory'agencies, encompassing both
informal and formal agency actions. These-agencies include
the Securities and Exchange Commission, the Federal Deposit
Insurance Corporation, the Comptroller of the-Currency, the.
Internal Revenue Servi.ce-~ the Department of the Interior,
MANATT. PHELPS, F~OTHENBERg' &'TUNNEY .-
January 15, 1982
Page 3
the Franchise Tax Board, the California State Banking
Department, the California. Department of Savings and Loan,
the California Coastal Commission, the California Department
of Corporations, the California Department of Real. Estate,~
and the State Board of Equ_ alization.
The firm's municipal bond department engages in a
broad spectrum of activities-representing cities, counties,
'and special districts in California and the West, princi-
pally as bond counsel. Such activities include advising
municipalities how best to finance Projects ranging from
building to water and sewer facilities, andpreparing legal
dOcumentation for the financing. The firm also engages in_
litigation to assist the~ municipalities in enforcing their
rights under the bonds. .~
In the real estate area, the firm has had exten-
sive experience in financing; real estate investment~trusts;
sales; private and publicly offered real estate syndications;
residential and commercial developments, including nation-.
wide shopping center development; subdivisions, inc'luding
condominium development and qualification;~- and landlord-
tenant matters. Real estate clients include large construc-
tion and development companies, developer~owners of commercial
and residential properties, and major lending institutions.
III. NEW LAWYERS ~
The firm seeks lawyers of the highest'caliber.
Emphasis is placed on academic achievement,-and other experi-
ence such as government service, clinical experience, and
relevant work experience. Since the firm encourages the.
production of legal services' of the highest quality and early
client-contact, as well as participation in. the management
of the firm, individual maturity and the ability and desire
to assume responsibility are also of great importance to us.
The firm's ninety-nine attorneys attended twenty-
eight different law schools. Including the.attorneys join-
ing the firm in 1982, twenty-three of'the firm's attorneys.
were formerly summer cl~erks with the firm'.
MANATT, PHELPS. ROTHENBERG ~ TUNNEY
January 15, 1982
Page 4
IV.~ BIOGRAPHICAL INFORMATION
Charles T. Manatt, 'born 'Chicago, Illinois, June 9;
1936; admitted to bar, 1962, California. Preparatory educa-
tion, Iowa 'State University (B..S. 1958); legal education,
George Washington University (J.~D. 1962). Member, Board of
Editors, George Washington Law Review, 1960-62.. Chairman,
California Democratic Party, 1971-.73, 1975-77; Southern
Chairman, California Democratic Party, 1973-75; Chairman,
Western States Conference Democratic Party, 1972-76; Demo-
cratic Party National Committeeman, 1976--; Democratic Party
Executive Committeeman, 1976--; Chairman,. National Finance
Council of the Democratic National. Committee, June, 1978-80;
Chairman, Democratic National Committee, 1980--; President,
San Fernando Valley Bar Association, 1971; Member, Los
Angeles County Bar Association Board of Trustees, 1978;
Chairman of the Board of Directors of Fimst Los Angeles
Bank, 1973--; Member, Board of Directors, Tiger International,
1980--; Member, Board of Directors, General Telephone Com-
pany, 1980--; President, California Bankers Association,
1979-80. Member: Los Angeles County and American Bar
Associations;- State Bar of Califomnia.
Thomas D. Phelps,~ born Sigourney> Iowa, October 10,
1936; admitted to bar, 1963, Iowa; 1964, Califor~ia; 1979,
U.S. Supreme Court. Preparatory education.,. Iowa State
University (B.S. 1959); legal education, George Washington
University (J.D. 1963). Member, Board of Editors, George
Washington Law Review, 1961-62; President, American. Law
Student Association, 1961-62. Director: Tokai Bank of
California; Deauviile Restaurant, Inc. Foreign lawcounselor
to the Tokyo firm of Nagashima & Ohno, 1978. Member:
California Bankers Association and Western Independent
Bankers Association; Los Angeles Area Chamber of Commerce;
Town Hall; Japan American Society of Southern California;
Advisory Board of Directors, California Museum of Science
and Industry; Los Angeles County and American Bar Associa-
tions; State Bar of California. (A-t Downtown L..A? Office.)
Alan I. Rothenberg, born Detroit, Michigan, April 10,
1939; admitted to bar, 1964, California. Preparatory edu-
cation, University o~ Michigan (B.A. 1960); legal education,
University of Michigan (J.D. 1963). Assistant Editor;
Michigan Law Review, 1962-63. Order of the COif. Member:
Board of Governors, National Basketball Association, 1975-79;.
Board of Governors, North American Soccer League, 1977-80.
commissioner (Soccer), 1984 Olympics. Director:- First Los
Angeles Bank; Bank of Newport; Newport Financial Ltd~; First' ~
MANATT, PHELPS, I~OTHENBERG & TUNNEY' ..'
January 15, 1982 . .
Page 5
Thrift of America; Wolf & Rissmi!ler Concerts. Member: Los'
Angeles County, Beverly Hills, Century City (Member, Board of
Governors, 1978--), and American Bar Associations (Chairman,
Litigation Section. Committee on Entertainment, Sports and Media
Litigation; Member, Executive.Committee, Sports Division, ABA
Forum Committee on the Entertainment and Sports Industries.);
State Bar of California.
John V. Tunney, born New York City, June. 26, 1934;
admitted~ to bar, 1959, Virginia; 1963, California; 1963, New
York'. Preparatory education, Yale-University (A.B. 1956);.
legal educa%ion, Academy of International Law, The .Hague,
Netherlands (!957), University of Virginia (J.D. 1959).
Member: The United States House.of Representatives, 1965-71.;.
The United States. Senate, 1971-77; Board of Directors,
Western Center on Law & Poverty, Inc. Member: American
and New York State Bar Associations; Virginia State Bar;
State Bar .of California.
L. Lee Phillips, born New York, New-York, August 16,
1937; admitted to bar, 1959, District. of Columbia; 19.60, New
York; .1964, California. Preparatory education, Corne.ll
University .(A.B. 1957); legal education, Cornell University
(J.D. 1959). Order of the Coi.f. Note Editor, Cornell Law
Quarterly, 1957-59. Trial Attorney, Department'of Justice.,
Tax Division, 1959-63. Member: 5os' Angeles Copyright
Society; Los Angeles County, Beverly'Hdlls, and American Bar
Associations; District of Columbia Bar; New. York State Bar;
State Bar of California.
Barnet Reitner, born Brooklyn, New York, March 29,
1945; admitted to bar, 1971, California. Preparatory educa-
tion, University of California at' Los. Angeles (A.B. 1.967);
legal education, University of California at Los Angeles
(J.D. 1970). Articles Editor, UCLA Law Review-, 19'69-70.
Director, California. Korea Bank. Member', Advisory Committee
to California State Banking Department on Banking Law and
General Corporation Law. Member: Los Angeles County,
Century City, and American.Bar Associations;'State Bar of
California.
Willie R. Barnes, born Dallas, Texas, December 9,
1931; admitted to bar,~ 1960, California.. Preparatory educa--
tion, University of California, Los Angeles (B.A. 1953);
legal education~ University. of. California, Los Angeles (J.D.
1959). California Commissioner of Corporations, 1975-79.
First Vice President, North American'Securities Administrators
Association, 19.78-79. 'President, Midwest Securities Commis-
sioners Association, 1978-79. Alumnus .of the Year, -UCLA Law
MANATT, pHELpS, ROTHENBE-RG & TUNNEY
January 15, 1982
Page 6.
SchoOl, 1976. Member: Oil and Gas Industry Advisory Com-
mittee and Real Estate Investment Advisory Committee, North
American Securities AdministratOr's Association; State of
California Securities Regulatory Reform Panel; Los Angeles
County, Beverly Hills, Century City,'and American (Member,
Committee on Commodity Regulation, Committee On Federal.
Regulation of Securities, and State Regulation of Securities
Committee) Bar Associations; State Bar of California.
Brian J. O'Neill, born New York, New York,
October 12, 1940; admitted to bar, 1966, California; 1968,
District of Columbia. Preparatory education, University of
Notre Dame.(A.B. 1962); legal education, Fordham. Law School
(J.D. 1965). Trial attorney, National. Labor Relations Board,
1966-67. Assistant United States Attorney, Central Distric~
of California, 1970-74; Member, U.S. District Court Indigent
Defense Panel, 1.977-78, 1980--. Member: California Attor-
neys for Criminal Justice; Los Angeles County and American
Bar Associations; Bar Association of the District of Columbia;
State Bar of California. (At Downtown L.A. Office.)
Michael Kantor, born Nashville., Tennessee, August 7,
1939; admitted to bar, 1968,' Florida;- 1972, District of
Columbia; 1975, California. Preparatory'education, Vander-
bilt University (B.A.. 1961); legal education, Georgetown
University (J.D. 1968). Member, Georgetown Law Review'.
State Chairman, Carter for President, 1980.. Director', Lega~
Services Corp., 1979--. Campaign Director, Brown for Presi-
dent, 1976. Campaign Director, Senator Cranston Reelection,
1974. Member: National Legal Aid and Defender Association;
American Bar Association; Florida State Bar; District of
Columbia Bar; State Bar of California.
Leslie S. Klinger, born Chicago,. Illinois, May 2,
1946; admitted to bar, 1.971, California. Preparatory educa--
tion, University of California, Berkeley (A.B. 19-67); legal
education, University of California, Berkeley-(Boalt Hall)
(J.D. 1971). ~Order of the Coif. Note and Comment Editor,
California Law Review, 1969-70. Trustee, Urban Innovations
Group. Director, Motion Picture and Television-Tax Insti-
tute Chairman, Estate and Financial Planning for the
Closely Held Corporation, Practising Law Institute, 1976-81.
Member: Los Angeles County, Beverly. Hills, and American Bar
Associations; State Bar of California.
MANATT, PHELPS, ROTHENBERG & TUNNEY
January 15'; '1982
Page 7
Martin M. Jelenko, born New York, NeW York, June 16,
1945; admitted to bar, 1972, New York; 1972, California.
Preparatory education, Columbia University (A.B. 1967); legal
education, New York University (J.D. 1971). Member:
Los Angeles County and American Bar Associations; State Bar'
of California.
Joseph Horacek III, born Atlanta, Georgia, May 18,
1941; admitted to bar, 1967, California. Preparatory educa-
tion, Occidental College and University· of California at Los
Angeles (B.A. 1963); legal education, University of California
at Los Angeles (J.D. -1966).. Member, Board of'Editors, UCLA
Law Review,- 1964-65. Member: Los Angeles Copyright' Society,
Beverly. Hills and Los Angeles County Bar Associations; State
Bar of California.
George R.. McCambridge; born Los Angeles, California,
June 5, 1945; admitted to bar, 1973, California. Prepara-
tory education, University of San Francisco (B.A. 1967); legal
education, University of California, Los Angeles (J.D.~ 1973).
Chief Articles Editor, UCLA Law Review, 1972-73. Director,.
UCLA School of Law Alumni. Association. Vice Chairman,
Brentwood Bank. Member: Los Angeles County and American Bar
Associations; Skate Bar of. California.~
Richard D. Williams, born Los~ Angeles, California,.
August 30, 1946; admitted to bar, 19.73, California. Prepar-
atory education, WaShington State University (B.A.. 1969);
legal education, University of Ca'lifornia at Los Angeles
(J.U. 1973).. Comment Editor, UCLA Law Review, 1972-73.
Member: Los Angeles County and American Bar Associations;-.
State Bar of California.
Arnold P. Schuster, born New York, New York,
August 4, 1940; admitted to bar, 1965, New York; 1970,
Maryland; 1978, California. Preparatory education, Cornell
University (A.B. 1962); legal education, Columbia University
(J.D. 1965). Member:- New York Stat'e Bar; State Bar of
California. '
Ronald J. Silverman, born-New York, New York,
August 29, 1946; admitted to bar, 1973, District of Columbia;
1978, California. Preparatory education, Pennsylvania State.
University (B.A.. 1967); legal education, George Washington
University (J.~D. 1972). Member, George Washington Law
Review. Assistant Chief,'Special Litigation Section, Anti-
MANA?T. PhElPS, F~OThENBERG & TUNNEY
Jaauary 15, 1982
Page 8
trust DivisiOn, U.S. Department of Justice, 1977; Trial
Attorney, Special Trial Section~ Antitrust Division, U.S.
Department of Justice, 1972-77. Special AssiStant U.S.
Attorney, Washington, D.C., 1975. Co-Editor, Merger Case
Digest, 1980. Member: Los-Angeles County, Century City,
and American Bar Associations; District of ColUmbia Bar;
State Bar of California.
George David Kieffer, born New York, New YOrk,
November !7, 1947; admitted to bar,~ 1973, California; District
of Columbia,~ 1980. Preparatory education, University of
California, Santa Barbara (B.A. 1969); legal education,
University of California, Los Angeles (J.D. 1973). Member,
UCLA Law Review, 1971-72. Extern Clerk, Chief Judge David
Bazelon, U.S. Court of Appeals, D.C. Circuit, 1972.. Vice
Chairman, University of California, Santa Barbara Foundation.
President, Alumni Association, University of Calif°rnia.,
Santa Barbara, 1976-77, 1978-80.. Regent-Designate and Regent,
Board of Regents, University of California, 1.978-80. Vice
President, Center for the Study of Democratic Institutions.
Member: Los Angeles County and American Bar Associations;
District of. Columbia Bar; State Bar of California.
Gordon M. Bava, born Stockton, California, February 12,
1948; admitted to bar, 1974, California. Preparatory educa-
tion, Georgetown University (B.S.F.S. 1970); legal educa-
tion, University of Southern California (J.D. 1974). Phi
Beta Kappa. Executive Note Editor, Southern California Law-
Review, 1973-74.. Member: Japan American Society of Southern
California; Los Angeles County and American Bar Associations;
State Bar of California. (At Downtown- L.A. Office.)
Marc Epstein, born Hollywood, California, March 1,
1949; admitted to bar, 1974, California. Preparatory educa-
tion, University of California at Los Angeles (B'.S. 1971);.
legal education, University of California, Los Angeles (J.D.
1974). Order of the Coif. Articles-Editor, UCLA Law Review,
1973-74. Member: Los Angeles County and Beverly Hills Bar
Associations;' State Bar of California.
Richard Lee Auqust,. born Chicago, Illinois, February 1;
1947; admitted to bar, 1974, California. Preparatory educa-
tion, University of Illinois (B.S. 1969; B.A. 1969); legal
education, University of Southern California (J.D. 1974).
Phi Beta Kappa. Notes and Articles Editor, Southern Cali-
fornia Law Review, 1973-74. Member: Los Angeles County and
Beverly Hills Bar Associations; .State Bar of California.
MANATT. PHELPS. ROTHENBERG & TUNNEY
January 15, 198.2 . -.
Page 9
Jack Fried, born Rome, ItalY, February 3,1949;
admitted to bar, 1974, California. Preparatory education,
University of California at Los Angeles (A.~B. 1971); legal
education, University of California at Los Angeles.
1974). Phi Beta Kappa. Counsel, California State Banking
Department, 1974-76. Member~: Los Angeles County and American
Bar Associations;State Bar of California.
Richard S. Shaffran, born Hollywood, California,
November 15, 1949; admitted to bar, 1974, California.
P~eparatory education,· University of California, Santa Cruz
(A.B. 1971); iegal ~ducation, Yale Law School (J.D. 1974).
Member: Beverly ~ and American Bar AssoCiations; State·
Bar of California.
Mark S. Greenfield, born Los Angeles, California,
April 11, 1950; admitted to bari 1.974, California. Prepara-
tory education, University of California, Los Angeles,~ (B.A.
1971); legal education, University of California, Berkeley
(Boalt Hall) (J.D. 1974). Law Clerk to U.S. District Judge
William T. Sweigert, Northern District of'California, 1973-74.
Member, Board of Trustees, University of California, Los
Angeles Foundation, 1977--. Member: Los Angeles County and
American Bar Associations; State·Bar of California.
Thomas E. McLain/ born Kansas City, Missouri,
August 19, 1946; admitted to bar, 19·74, California. Prepara-·
tory education, Duke University (A.B. 1968); l~egal education,
Duke University (J.D. 1974). Articles Edit·orr, Duke Law
Journal, 1973-74.. Graduate of the Inter-University center
for Japanese Language Studies in Tokyo,. Japan; Japan Founda-
tion Fellow, 1974-75. Foreign law counselor to the Tokyo
firm of Nagashima & Ohno, 1975 and 1978-79. Founder, The
Century of the Pacific Conferences in Los Angeles and Tokyo.
Lecturer: University of Southern Califomnia Law Center; UCLA
Extension; Practising Law Institute.; Federal Bar Association;
U.S. Chamber of Commerce; Keidenren. Member: Japan American
Society of Southern California; Japan-California Association;
American Bar Association; Federal Bar Association; State Bar
of California. (At Downtown L.A. Office.)
John F. Stuart, born San Francisco, California,.
April 7, 1947; admitted to bar, 1972, California. Preparatory-
education, University of San Francisco (A.B. 1969); legal
education, University. of San Francisco (J.D. 1972). Lead
Articles Editor, University of San Francisco Law Review.
MANaTT, PHELPS, F~OTHENBERg & TUNNEY
January 15, 1982
Page 10
Counsel, California State Banking Department, 1973-77;.
Assistant Chief Counsel 1977-78. Member, State Bar of
California.
Paul J. Hall, born San Diego, California, January 13,
1951; admitted to bar, 1975, California. Preparatory edu-
cation, University of California at Santa Cruz (A.B. 1972);
legal education, Yale Law School, 1972-1973, University of
California at Berkeley (Boalt Hall)' (J:D.~ 1975). Member:
Los Angeles County and American Bar Associations; State Bar
of California.
Maria D. Hummer~ born Los Angeles, California,
June 12, 1944; admitted to bar, 1976, California; District
of Columbia, 1979. Preparatory-education, Scripps College
(B.A. 1968); legal education, University of California, Los
Angeles (J.D. 1976). E~terly Scholar Board of Editors,
UCLA Law Review, 1975-76. Member, California Regional Water
Quality Control Board; Los Angeles Region, 1976--. Member:
Los Angeles County, Century City, and American Bar Associ-
ations; District of Columbia Bar; State Bar of California..
James C. Corman, born Galena, Kansas, October 20,
1920; admitted to bar, 1949, California. P. reparatory education,.
University of California, Los Angeles (B.A. 1942); legal
education, University of Southern California (J.D. 1948).
Member: Los Angeles City Council, 1957-60; United States
House of Representatives, 1961-81; President's Advisory
Commission on Civil Disorders, 1967-68. Member: San
Fernando Valley, Los Angeles County, and American Bar
Associations; State Bar of California. (At D.C. Office.)
Jane Frank-Harman, born New York, New York, June 28,
1945; admitted to bar, 1969, District of Columbia. Prepara-
tory education, Smith College (B.A. 1966); legal education,
Harvard. Law School (J.D. 1969). Phi Beta Kappa. First
Chief Counsel and Staff Director, Subcommittee on Represen-
tation of Citizen Interests, Committee on the Judiciary,
U.S. Senate, 1973-75. Chief Counsel and Staff Director,
Subcommittee on Constitutional Rights, Committee on the
Judiciary, U.S. Senate, 1975-77. Deputy Secretary to the
Cabinet, The White House, 1977-78. Member: American Bar
Association; District of Columbia Bar; Federal Bar Association;
Women's Bar Association;Women's Legal Defense Fund; Federal
Judicial Center Committee on Experimentation in the Law;
Council on the Role of the Courts. (At D.C. Office.)
IV~ANATT. PHELPS. ROTHENBERG ~ TUNNEY
January 15, 1982
Page tl
David B. Jacobsohn, born-Springfield,· Massachusetts,
December 18, 1943; admitted to bar, 1968, New York; 1980,
District of Columbia. preparatOry education, Cornell Univer-
sity (B.A.-1965);· legal education, Cornell University (J.D.
1968). Senior Staff Attorney, Securities and Exchange
Commission, 1967-72. Director,' Securities Disclosure Division,
Comptroller. of the Currency, 1972-78. Special Assistant to
Director William Isaac, Federal Deposit Insurance Corporation,
1978-79. Chairman, Legal Problems of Bank Regulation;
Chairman, 15th and 16th Banking Law Institute; Co-author,
Federal Regulation of Banking. Member:- Federal and American'
Bar Associations; New York Bar; District of Columbia Bar.
(At D.C. Office.)
Harold E. Rogers, Jr., born Chowchilla, California,
November 12, 1930; admitted to bar, 1955, California; 1967,
U.S. Supreme Court. Preparatory education·, Stanford University
(A.B.· 1952); legal education, Stanford University (J.D.
1955). Phi Beta Kappa. Co-author, Water for California
(2. Vols.) and of other publications on. Municipal Finance;
Guest Lecturer on Municipal Finance; Chairman, Commission on
the Review of the Federal Impact' Aid Program (Presidential
Appointment). .Member: The Bar Association of San Francisco;
.American Bar Association; State Bar of California. (At.S.F..
Office.)
K. Barry Schochet, born Asheville,. North Carolina,
May 18, 1947; admitted to bar, 1973, Georgia; 1974, Florida
and District of Columbia. Preparatory education, University
of North Carolina, Chapel Hill, (B.A. 1969); legal education,
Emory University School of Law (J.D. 1972). Order of the
Grail. Assistant Counsel, U.S. Senate Select Committee on
Presidential Campaign Activities, Sam J. Ervin, Chairman
(Senate Watergate Committee), 1973-74. Legislative Counsel
to U.S. Senator Richard Stone (Florida) 1975-79. Counsel,
U.S. Senate Committee on Foreign Relations ·1979-81. Member:
American Bar Association; District of Columbia Bar, The
Florida Bar; State Bar of' Georgia. (At D.C. Office.)
Mary Jane Large, born New. York, New York, November 13,
1950; admitted to bar, 1975, California and District of-
Columbia. Preparatory education, University of California.
at Berkeley (A.B., 1971); legal education, University of
California at' Berkeley (Boalt Hall)(J.D. 1974). Editor,
Ecology Law Quarterly, 1972-74.' Member: Los Angeles County
and American Bar Assocations; State Bar of California.
MANATT, PHELPS, ROTHENBERg & TUNNEY -,
'January 15, 1982
Page 12
Peter T. Paterno, born Queens, New York, February 3,
1951; admitted to bar, 1976~ California. Preparatory educa-
tion, Harvey Mudd College (B.S. 1972), University of Hawaii
(M.A. 1973); legal education, University of California, Los
Angeles (J.D 1976). Member, State Bar'of California.
Neal L'. Petersen, born3San Francisco, California,
February 4, 1937; admitted to bar, 1963, California. Pr.epara-
tory education, University of California, Berkeley (A.B.
1958); 'legal education, Harvard Law School (J.D. 1962).
Member: Federal and American Bar Associations; District of
Columbia Bar. (At D.C. Office.~)
Ross T. Schwartz, born Los Angeles, California,
August 9, 1949; admitted to bar, 1976, California. Prepara~
tory education, University of. California, Berkeley (A.B.
1971); legal education, George Washington. University (J.D.
1975). Member: Los Angeles County Bar Association; State
Bar of California.
Lisa Specht, born Los Angeles, California, Decem-
ber 5, 1,9%5; admitted to ba~, 19.76, California. Legal educa-
tion, University of' San Fernando Valley, College of Law (J.D.
1976). Editor-in-Chief, USFV Law Review, 1974-.75. Legal
commentator, KABC Television. Director, American Civil
Liberties Union of Southern California, 1972-78. Board. of'
Governors, Women Lawyers' Association of Los Angeles, 1977--;
Chairperson, ACLU Women's Rights Project Southern California,
1971-78. Board of Governors, the Los Angeles Woman's Building,.
1979-- Director, Women's Political Committee 1977-- Member:
Los Angeles County, Beverly Hills, Century City, and American
Bar Associations; State Bar of California.
Peter D. Kelly, born Pasadena, California, July 30,
1948; admitted to bar, 1977, California; 19.79, District of
Columbia. Preparatory education, California State Univer-.
sity, Fullerton (B.A. 1972); legal education, Southwestern
University (J.D. 1976). Lead Articles Editor, Southwestern
University Law Review, 1975-76. Member: Los Angeles CitL-
zens Advisory Committee on Airports, 1973; Los Angeles County
Probation Commission, 1976-77; California State University,
Fullerton, Alumni Association Board of Directors, 1980.
California Democratic Party: Southern California Chairman,
1981--; Counsel, 1977-81; Chairman, Compliance Review Commis-
sion, 1978; Executive Director, State' of California, 1975-76,
MANATT, PHELPS, ROTHENBERG & TUNNEY
January 15, 1982
Page 13
Southern California, 1973-75; 'Finance Director, 1972.
Campaign Manager, Yvonne Brathwaite Burke- for Statue Attorney
General, 1978. California Finance Co-Chairperson,.Carter/
Mondale P=esidential Campaign, 1979-80. 1980 Democratic
National Convention: Alternate-Delegate; RUles Committee
Member. Member: Los Angeles County, Century City, and Ameri-
can Bar Associations; District of Columbia Bar; State Bar'of
California.
Bert H. Deixler, born Bronx, New York, November 8,
1952; admitted to bar,. 1976, California. Preparatoryeduca-
tion, George Washington UniversLty (B.A. 1973); legal educa-
tion, Columbia University Law School (J.D. 1976). Phi Beta
Kappa; Harlan Fiske Stone Scholar. Member, Columbia Univer-
sity Journal of Environmental Law. Assistant U.S. Attorney;
Criminal Division, Central District of California, 1978-81.
Member: Los Angeles County and'Federal Bar Associations;
State Bar of California.
Irwin Jay Deutch, born Detroitl Michigan, August 5,
1941; admitted to ba=, 1965, Michigan; 1980, California.
Preparatory education, University of Michigan (B.B.A. 19'62);
legal education, University of. Michigan (J.D. 1965); George-
town University (LL.M. in Taxation 1967). Order of the Coif.
Member: Los Angeles County, Beverly-Hills, Michigan, Ameri-
can, and Federal'Bar Associations; State Bar of California.
Julian Gresser, born New York, New YOrk, jUne 7,
1943; admitted to bar, 1971, California. Preparatory edu-
cation, Harvard University (A.B. 1965, M.A. 1967); legal
education, University of California, Berkeley (Boalt Hall)
(J.D. 1971). Member: California and Hawaii Bar Associa-
tions; State Bar of California..
Lee F. Colton, born Los Angeles, California,
February 12, 1936; admitted to bar, 1962, California. Prepa-
ratory education, University.of 'California at Los Angeles
(B.S. 1958); legal education, University of California School
of Law at Los Angeles (LL.B. 1961).. Member: State Bar of
California.
I~IANATT. PHELPS. I~OTHENBERG & TUNNEY
'January 15, 1982
Page 14
Jerry J2 Gotdstein, born Los Angeles, California,
November 3, 1943; admitted to bar, 1974, California. Prep-
aratory education, University of California, Berkeley (B.S.
1966); legal education, University of San Francisco (J.D.
1974). Member, McAuliffe Law Honor Society..' Assistant
Editor, .University of San Francisco Law Review, 1973-74.
Extern to Justice Raymond L. Sullivan, Supreme Court of Cali-
fornia, 1973. Member: Beverly Hills and American Bar Asso-
ciations; State Bar of California.
Barbara J. Zuckerman, born Los Angeles, Califor-
nia, August 6, 1948; admitted to bar, 1975, California.
Preparatory education, University of Southern California
(B.A. 1971); legal education, Loyola University (J.D. 1974).
Member: Los Angeles County, Beverly Hills, and American Bat'
Associations; State Bar of California.
Steven A. Nissen, born Los Angeles, California,
March 25, 19'51; admitted to bar, 1976, California; 1980,
District of Columbia. Preparatory education, Stanford
University (B.A. 1972); legal education, University of Cali-
fornia, Berkeley (Boalt Hall) (J2D. 1976). Commissioner,
Los Angeles County Rent Adjustment Board. Member: Los
Angeles, Century City, Beverly Hills (Board of Governors,
Barristers), and American Bar Associations; District of
Columbia Bar; State Bar of California.
Lawrence J. Blake, born New York, New York, Novem-
ber 28,. 1950; admitted to bar, 197'6, California. Prepara-
tory education, Le Moyne College (B.A. 1972); legal educa-
tion, Harvard Law School (J.D. 1976). Member: Los Angeles
County and Beverly Hills (Secretary, Barristers; Co-Chairperson,
Barristers' Committee for the Arts) Bar Associations; State
Bar of' California.
Frederica R. Obrzut, born Los Angeles, California,
December 22, 1949; admitted to bar, 1977, California. Pre-
paratory education, University of California, Santa Barbara
(B.A. 1971), University of California, Los Angeles (M.A.
1974); .legal education, University of California, Los Angeles
(J.D. 1977). Managing Editor, UCLA Law Review, 1976-77.
Member, State Bar of California.
IV~ANATT.. PHELPS, ROTHENBERg ~ TUNNEY
January 1'5, 1982
Page 15
Howard E. King, born Berkeley/ 'California, October 3,
1952; admitted to bar, 1977', California. Preparatory educa~
tion, University of California at Los Angeles (B.A. 1974);
legal education, ~niversity of California at Los Angeles
(J.D. 1977). Chief Justice, Moot Court Honors Program.
Member: American Bar Association; State Bar of California.
Keith T. Holmes, born Chicag°, Illinois, June 17,
1952; admitted to bar, 1977, California. P=eparatory educa~
tion, Northwestern University (B.A. 1974); legal education,
University of Pennsylvania (J.D. 1977). Order of the Coif.
Editor, University of Pennsylvania Law Review. Member: Los
Angeles County Bar Association; State Bar of California
(At Downtown L.A. Office.)
Timothy Pat=ick Furlong, born Dallas, Texas,
November 24, 19%6;' admitted to bar, 1977, California; 1980,
District of Columbia. Preparatory education, University of
Texas (B.A. 1969); legal education,. University of Texas (J..D.
1977). Legislative Assistant to Senator Lloyd Bentsen,
1971-74; Special Assistant to Senator Lloyd Bentsen, 1975-76.
Member.: American Bar Association; District of Columbia Bar;
State Bar of California. (At D.C. office.)
Stephen D.. Greenberg, born New York,. New York,
September 8, 1948; admitted to bar, 1977, California. Prepa-
ratory education, Yale University (B.A. 1970); legal educa-
tion, University of California, Los Angeles (J.D. 1977).
Member, UCLA Law Review, 1975-77. Member, State Bar of
California.
Louis A. Spoto, born Brooklyn, New York, May 12,
1950; admitted to bar, 1978, New York; 1978, California.
Preparatory education, Colgate University (B.A. 1972); legal
education, Harvard Law School (J.D. 1977). Clerk, Judge
Robert J. Kelleher, U.S. District Court, 1977-78. Board of
Editors, Journal on Legislation. Member: New York Bar;
State Bar of California.
Nancy R. Schauer, born Detroit, Michigan, Septem-
ber 9, 1950; admitted to ba~, t976,. California. Preparatory
education, University of Michigan (A.B. 1972); legal educa-
tion, UniversitY of Michigan (J.D. 1976). Member, Univer-
sity of Michigan Journal of Law Reform. Member:. Los Angeles~
COunty and American Bar Associations; State Bar of California.
MANATT; PHELPS, F~OTHENBERG & TUNNEY
January 15, 1982·
Page 16
William S. Brunsten, born Los Angeles, California;
April 6, 1947; admitted to bar, 1974, California.' Prepara~
tory education, University of California, Berkeley (B.A.
1970); legal education., University of California, Los Angeles
(J.D. 1974). Member: Los Angeles County, Beverly Hills,
and Century City Bar Associations; State Bar of California~
Lawrence J. Ulman, born Flushing, New York,
January 25, 1950; admitted to bar 1975, California. Prepar-
atory education, University of Southern California (A.B.
1972); University of California, Los Angeles (M.B.A. 1980);
legal education, University of Southern California (J.D.
1975). Recipient, ASCAP Nathan Burkan Memorial Award in
Copyright. Member: Los Angeles County and American Bar
Associations; Copyright Society of the U.S.A.; State Bar of'
California.
Isabel Well_, born New York, New YOrk, April 5,
1949; admitted to bar, 1973, New Jersey; 1981, California.
Preparatory education, Barnard College (B.A. 1970); legal
education, University of Pennsylvania (J.D. 1973)~ Member:
American Bar Association; New Jersey State Bar; State Bar of
California.
John B. Emerson, born Chicago, -Illinois, January 1!,
1954; admitted to bar, 1978, California. Preparatory educa-
tion, Hamilton College (A.B. 1975); legal education, Univer-
sity of Chicago (J.D. 1978). Phi Beta Kappa; Phi Delta Phi.
Member: American Bar Association; State Bar of California.
.William T. Quicksilver, born St. Louis, Missouri.,
July 26, 1952; ~dmitted to bar, 1978, California. Prepara-.
tory education, Princeton University (A.B. 1974); legal educa--
tion, University of Chicago (J.D. 1978). Associate Editor,
Chicago Law Review. Member, State Bar of California.
Nikki Wolontis, born Morristown, New Jersey,
April 27, 1953; admitted to bar, 1978, California. Prepara-
tory education, New York University (B.A. 1974); legal educa-
tion, Stanford University (J~D. 1978). Phi Beta Kappa.
Extern'Clerk, Judge George W. Phillips, Jr., Superior Court,
Alameda'County (1977-78). Founding Member, Stanford Public
Interest Law Foundation. Member: Los Angeles County and
American Bar Associations; State Bar of California.
MANATT. PhElPS, ROTHENBerg& TUNNEY
January 15, 1982
Page 17
Mary Elizabeth Doyle, bOrn Sacramento, California,
May 1, 1952; admitted to bar, 1979, California. Preparatory
education, University of California, Santa Cruz (A.B. 1974);
legal education, University of California,. Berkeley (Boalt
Hall) (J.D. 1978). Member: Berkeley Law Foundation; Ameri-
can, Beverly Hills, and Century City Bar Associations; State
Bar of California. ~
Edward C. Rybka, born Passaic, New-Jersey, Septem-
ber 29, 1953; admitted to bar, 1978, California. Prepara-
tory education, The Sorbonne, Paris, France, and Princeton
University (A.B. 1975); legal education, Duke University
(J.D. 1978). Member: Los Angeles County Bar Association;..~
State Bar of California.
Steven M. Goldberg, born B'ronx, New York,
February 19, 1954; admitted to bar, 1978, California; 1979,
New York. Preparatory education, Harvard University (A.B.
1975); legal education, New York University School of Law
(J.D. 1978). Member, New York University Law Review, 1976-77.
Member: Los Angeles County and Beverly Hills Bar Associa-
tions; State Bar of California.
Matthew S. Steinberg, bo'rn Los Angeles, California,
October 20, 1953; admitted to bar, 1978, California. Rrepa-
ratory education, University of California, Berkeley (B.A.
1975); legal education, University of San Diego (J.D. 1978).
Member:~ Los Angeles County and American Bar Associations;
State Bar of California.
Jeffrey M. Wernick, born Brooklyn, New York,
June 20, 1953; admitted to bar, 1979, New York; 1981, Cali-
fornia. Preparatory education, State University. of New York
at Buffalo (B.A. 1974)'; legal education; New York University
(J.D. 1978). Member: New York Bar; State Bar of California.
Peter J. Ross, born New YOrk, New York, June I0,
1953; admitted to bar, 1979, New York. Preparatory educa-
tion, Yale University (B.A. 1975); legal education, Emory
University (J.D. 1978). Member: American Bar Association;
State Bar of New .York. (At S.F. Office.)
Andrew Stuart Pauly, born Los Angeles, California,
January 18,~ 1955; admitted to bar, 1979/ California. Prep-
aratory education, Lewis & Clark College (B.A.. 1976); legal
MANATT. PhElPS. F~OTHE'NBERG & TUNNEY
January 15, 1982
Page 18
education, -University of California, Los Angeles (J.D. 1979).
Member: Los Angeles County, Century City, and American Bar
Associations; California Trial Lawyers Association; State
Bar of California.
Joan Whitehead Evans, born Waukegan, Illinois,
Uecember 31, 1949. Preparatory education, Illinois State
University (B.S. 1970, M.S. 1972), University of 'California,
Los Angeles (M.B.A. 1979); legal education, University of
California, Los Angeles (J.D..1979). Moot Court Executive
Board of Judges, 1978. Director, Legal Aid Foundation.
Member: Sex Equity Commission, Los Angeles Unified. School
District; National Bar. Association; State Bar of California.
Barbaua J. Schlain, born Detroit, Michigan, May 15,
1954; admitted to bar, L979, California. Preparatory educa-
tion, University of Michigan (B.A. 1975); legal education,
University of Michigan (JiD. 1979)~ Editor, Michigan Year-
book of International Legal Studies. Member:. State Bar of
California. (At Downtown L.A. Office.)
Susan Lerner, born Brooklyn, New York,~ March 17,
1951; admitted to bar, 1979, New York; 1981, California.
Preparatory education, University of Chicago (B.A. 1973);
legal education, New York University (J.D. 1978)-. Member:
New York Bar; State Bar of California.
Benet E. Long, born New York, New York, September
15, 1954; admitted to bar, 1979, Washington, D.C. Prepara-
tory education, University of Virginia (B.A. 1976); legal
education, Washington College of Law, The American Univer-
sity (J.D. 1979).. Member, District of Columbia Bar.
(At D.C. Office.)
Arn H. Tellem, born Philadelphia, Pennsylvania,
February 21, 1954; admitted to bar; 1980, California. Prepa-
ratory education, Haverford College (B.A. 1976); legal educa-
tion, University of Michigan (J.D. 1979). Member, State Bar
of California.
Terry D. Garcia, born jaCksonville,. Florida,
March 27, 1953; admitted to bar 1980; District of Columbia.
Preparatory education, American University (B.A. 1975); legal
education, George Washington University (J.D.- 1980). Staff
Member, Journal of International Law and Economics.. Member,
IV~ANATT. PHELPS, F~OTHENBERG' & TUNNEY
January 15,-1982
Page 19
District of Columbia Bar. Co-author, Federal Regulation of
Banking. (At Downtown LoA. Office.)
Steven Marcus Knisley, born Santa Monica, Cali-
fornia, February 26, 1952; admitted to bar, 1980, California.
Preparatory education, Yale University (A.B. 1974); legal
education, Harvard Law School (J.D. 1980). Member, State
Bar of California.
Jane L. Ellison, born Mansfield, Ohio, January 16,
1956; admitted to bar, 1980, California. Preparatory educa-
tion, Cornell University (A.B. 1977);- legal education, Univer-
sity of Chicago (J.D. 1980. Phi Beta K~ppa; Phi Delta Phi.
Member, State Bar of California.
Rita Eidson DeBoer, born Princeton, Illinois, May 5,
1953; admitted to bar, 1980, California. Preparatory educa-
t±on,~ Scripps College (B.A. 1975), Harvard University (M.T.S..
1977); legal education, University of California, Los Angeles
(J.D. 1980). Rockefeller Fellow, 1975-76. Chief Comment
Editor, UCLA Law Review, 1979-80. Member: Women Lawyers
Association of Los Angeles; State Bar of California
Leslie.A. Swain, born Long Beach, California,
April 26, 1953; admitted to bar, 1980, California. Prepara-
tory education, California State Universtiy, 5ong Beach (B.A.
1977); legal education, University of California at Davis
(J.D_ 1980). Member, UC Davis Law Review 1979-80. Member:
King Hall Legal Foundation, Los Angeles County and Century
City Bar Associations; State Bar of California.
Alan Mintz, born. New YOrk, New York, May 18, 1954;
admitted to bar, 1980, California. Preparatory education
University of California, Berkeley (A.B. 1976); legal educa-
tion: Los Angeles Bar Association; University of Califor-
nia, Los Angeles (J.D. 1980). Member, State Bar- of
California.
Masahiro Shimojo, born Gifu, Japan,~ March 19, 1944;
admitted to bar, 1973, Japan. Legal education, Tokyo Univer-
sity (L.L.B. 1966); Legal Training and Research Institute
(1973);.University of Michigan Law School (M.C.L. 1980).
Member, The First Tokyo Bar Association.
N1ANATT, PHELPS, ROTHENBERG & TUNNEY
January 15, 1982
Page 20
John W. Cochrane, born Cleveland, Ohio, December 12,
1955; admitted to bar., 1980, California. Preparatory educa-
tion, University of California, Davis (A.B.. 1977); legal
education, University of California, Los Angeles (J.D. 1980)..
Member, State Bar of California.
Gary Hal Amsterdam, born Chicago, Illinois,
March 21, 1957; admitted to bar, 1981, California. Prepara-
tory education, University of Texas, Austin. (B.A. 1977);
legal education, University of Texas, Austin (J.D. 1980).
Phi Beta Kappa. Member, State Bar of California.
Enda Thomas Brennan, born Galway, Ireland,
October 31, 1955; admitted to.bar, 1980, California. Prep-
aratory.education, University of California, Berkeley (A.B.-
1976); legal education, Harvard Law' School (J.D. 1980). Phi
Beta Kappa. Member, State Bar of California.
Ellen B. Behravesh, born Pottstown, Pennsylvania,
August 31, 1951; admitted to bar, 1977, Pennsyluania; 1978,
District of'Columbia. Preparatory education, University of
Pennsylvania (A.B. 1973) legal education, University of Penn-
sylvania School of Law (J.D. 1977), Georgetown University
Law Center (LL.M. in Taxation 1981). Delta Theta Phi.
Member: Pennsylvania and American Bar Associations; Ameri-
can Society of International Law; Pennsylvania Bar; District
of Columbia Bar.
Richard A. Kale, born Brooklyn, New York, January 29,
1955; admitted to bar, 1980, California. PreparatorY educa-
tion, University of California, Berkeley (A.B. 1976); legal
education, Yale 5aw School (J.D. 1980). Phi Beta Kappa.
Member, State Bar of California.
Barbara Zipperman, born Los Angeles, California,
September 3, 1953; admitted to bar, 1980, California. Prepa-
ratory education, Princeton University (A.B. 1975); legal
education, University of California, Davis (J.D. 1980).
Member: Los Angeles County and Beverly Hills Bar Associa-
tions; State Bar of California.
Anne H. Krummenacher, born St. Louis, Missouri,
November 22, 1951; admitted to bar, 1.981, California. Prepa-
ratory education, Occidental College (A.B. 1973); legal educa-
tion, Loyola Law School (J.D. 1980). Member, State Bar of
California.
MANATT, PHELPS, ROTHENBEI~G & TUNNEY
January 15, 1982
Page 21
Shinaan S.~ Krakowsky, born Brooklyn, New York,
January 8, 1954; admitted to bar, 1981, California.
Preparatory education, State UniversitY of New York at
Buffalo (B.A 1976); legal education, Southwestern University
(J.D. 1981). Member: State Bar of California.
David W. Crumpacker, born Woodland,. California,
November 16, 1955; admitted to bar, 1981, California. Prepa-
ratory education, University of Colorado (B.A. 1978); legal
education, George Washington University (J.D. 1981). Phi
Beta KaPpa. Member: State Bar of. California.
K. Terrance Garcken, born Los Angeles, California,
January 24, 1948; admitted to bar, 1981, California. Prepa-
ratory education, University of California, Santa Barbara
(B.A. 1970); legal education, University of California, Los
Angeles (J.D. 1981). Member: State Bar of California.
Ginna Ingram, born Los Angeles, California,
January 18, 1956; admitted to bar, 1981, California. Prepa-
ratory education, University of California, Berkeley (B.A.
1978); legal education, University of California, Davis (J.D.
1981). Member: State Bar of California.
Carol J. Moore, born New Haven, Connecticut,
September 8, 1956; admitted to bars 1981, California.. Prepa-
ratory education, Radcliffe College (A.B. 1978); legal educa-
tion, Harvard Law School (J.D. 1981). Member: State Bar of
California.
Jody E. Graham, born Detroit, Michigan, August
1955; admitted to bar, 1981, California. Preparatory educa-
tion, University of California, Santa Barbara (B.A. 1977);
legal education, University of California, Davis (J.D. 1981).
Member: State Bar of California.
Deborah A. Lee, born Oakland, California, March 8,
1956; admitted to bar, 1981, California. Preparatory educa-
tion, University of California, Davis (A.B: 1978); legal
education, University of California, Davis (J.D. 1981).
Member-: State Bar of California.
Carol L. Mayali, born Burbank, California, January 9
1955; admitted to bar, 1981, California. Preparatory educa-
tion, University of California, Irvine (B.A. 1977); legal
MANATT, PHELPS, F~OTHENBERG K, TUNNEY
January 15, 1982
Page 22
education, University of California, Los Angeles (J.D. 1981).
Member: State Bar of California.
Marc H. Rapaport, born New York City, February 6~
1957; admitted to bar, 1981, California. Preparatory educa-
tion, Wharton School, University of Pennsylvania (B.S. 1978);
legal education, Harvard Law School (J.D. 1981). Member:
State Bar of California.
Eugene Tanaka, born Chicago, Illinois, June 5,
1956; admitted to bar, 1981, California. Preparatory educa-
tion, Columbia University (B.A. 1978); legal education,
Columbia University (J..D. 1981). Member: State Bar of
California.
Helen Elmquist Cutler, born Iowa City, Iowa,
August 31, 1938; admitted to bar., 1981, California. Prepara-
tory education, University of Southern California (B.A. 1960);
legal education, University of California, Los Angeles (J.D.
1981). Extern Clerk, Justice Rodney K. Potter-, California
Court of Appeal, Second District (Los Angeles), Spring 1980.
Member: State Bar of California..
Daniel L. Appelman, born Los Angeles, California,
December 29, 1944; admitted to bar, 1981, California. Prepa-
ratory education, San Francisco State University (B.A. 1968,
M.A. 1973); Temple University (Ph.D 1982); legal education,
University of California, Los Angeles (J.D. 1981). Member:
State Bar of California.
Diane J. Gideon, born Queens, New York, December 1,'
1955. Preparatory education, University of California, Los
Angeles (B.A. 1977); legal education, University of Cali-
fornia, Los Angeles (J..D. 1981).
Laurie Karon, born Highland Park, Illinois,
August 16, 1956. Preparatory education, Northwestern Univer-
sity (B.S. 1977); legal education, University of Illinois
(J.D. 1981). .
The following will be-joining the firm in 1982.
Philip Recht, born PittsbUrgh, pennsylvania,
June 10,. 1953. Preparatory education, Yale University (B.A.
1975); legal education, University of Pennsylvania (J.D.
1981).
MANATT, PHELPS, ROTHENBERG & TUNNEY
January 15, 1982
Page 23'
Elizabeth Watson, born Lakewood, Ohio, July 20,
1955. Preparatory.educatiOn, Northwestern University (B.S.
1977); legal education, University of Southern California
(J.D. 1981).
Roger Lane Carrick, born High Point, North Carolina,
July 28, 1951;. admitted to bar; 1980, California. Prepara-
tory education, Harvard College (A.B. '1973, Ph.D 1975); legal
education, University of California,. Berkeley (Boalt Hall)
(J.D. 1980). Member, State Bar of California.
Daffy Sragow, born May 17, 1946. Preparatory
education, Cornell University (B.S. 1966); University.of
Pennsylvania (M.A. 1968); legal education (J.D. 1981).
Tot Braham. Preparatory education, Columbia
College (A.B.. 1979); legal education, New York' University.
Helen L. Delaney. Preparatory education, Cornell
University (B.A. 1979); legal education, University of Cali-
fornia, Berkeley (Boalt Hall).
Timothy J. Hoy, born May 13., 1956. Preparatory
education, Oberlin College (B.A. 1978); legal education,
University of Michigan.
Brad R. Krevoy. Preparatory education, Stanford
University (B.A. 1978); legal education, Hastings College.
Kenneth Krug, born October 25, 1958. Preparatory
education, Duke University (A..B. 1979); legal education,
University of Chicago.
Robert D. Lee. Preparatory education, Harvard
College (B.A. 1978); Legal education, Georgetown Law Center.
Dennis A. Miller.. Preparatory education, Univer-
sity of California, San Diego (B.A. 1978); legal education,
University of California, Berkeley (Boalt Hall).
Brad A. Mortice. Preparatory education, Claremont
Men's College (B.A. 1978); legal education, University of
California, Berkeley (Boalt Hall).
MANATT, PHELPS, ROTHENBERG & TUNNEY
January 15, 1982
Page 24
Matthew P. Quilter. Preparatory education,
Princeton University (B.A. 1974); legal education, Univer-
sity of Pennsylvania.
Ronald L. R°dgers, Jr., born Brawley~ California,
February 2, 1956. Preparatory education, University of·
Southern California (B.A. 1979); legal education, George
Washington University.
Charles M. Shumaker III Preparatory education,
Tufts University (B.A~ 1976), Columbia University (M.A. 1979);
legal education, University of Michigan.
Steven M. Siemens Preparatory education, Stanford
University (B.A. 1976); legal education, Hastings College.
Cary H. Thompson, born Winchendon, Massachusetts,
August 4, 1956. Preparatory education, University of Cali-
fOrnia, Berkeley (B.A. 1978); legal education, University of
Southern California.
The following persons will be working with the
firm as summer associates during the summer of 1982:
John Michael Alongi. Preparatory education,
University of California, Davis (B.A. 1979); legal educa-
tion, Univer'§ity of California, Davis.
Peg O. Casey. Preparatory education, Gannon
College (B.A. 1974); legal education, University of Southern·
California Law Center.
Mona A. Clee. Preparatory education, Austin college
('B.A.); University of Texas at Austin (M.B.A.; legal educa-
tion, University of Texas School of-Law.
Mitchell H. Cohen. PreParatory education, Brown
University (A.B. 1980); legal education, New York University·
School of Law.
Christina Desser.~ Preparatory education, UniVer-,
sity of California, Berkeley (B.A. 197'8); legal education,
McGeorge School of Law.
MANATT. Ph£lP$, F~OThEnB'ERg & TUNNEY
January 15, 1982
Page 25
Julie R. Fenster. Preparatory education-, Brown
University (A.B. 1979); legal education, University of Penn-
sylvania Law School.
Michael Allen Firestein. Preparatory education,
Brown University (A.B. 1980); legal education, Northwestern
University School of Law.
Brian K. Lipson. PreParatory-education, Univer-
sity of Michigan (A.B. 1978); 1.egal education, University of
Pennsylvania Law School.
Marshall M. Howell. Preparatory education, Massa-.
Chusetts Institute of Technology (S.B. 1980); legal educa-
tion, Harvard Law School..
Clare Bronowski Koopersmith. Preparatory educa-
tion, Harvard University (B.A. 1976); legal education,
University of California, Los Angeles.
Steven Alan Laub. Preparatory education, Univer-
sity of California, Los Angeles (B.A. 1980); legal educa-
tiOn, Harvard Law School..
John J. Little. Preparatory education, Cook
College/Rutgers (B.S. 1980); legal education, Yale Law
School.
Michael T. Maurer: Preparatory education, Iowa
State University (B.A. 1980); legal education, University of
Michigan Law School.
Scott William Pink. Preparatory education, Harvard
University (B.A. 1980); legal education, Harvard Law School.
Pat Renee SPengler. Preparatory education, Yale
University (B.A. 1978); legal education,' Yale Law School.
Daniel G. Swanson. preparatory education, Univer-~.
sity of California, Berkeley (A.B. 1979); legal education,
Harvard Law School.
Should Mandatory Redemption Be "Mandatory"? Case Study:
New York State Public Authorities' Bond Redemption Policy
...Frank Paukowits and Benjamin Lonner
The "Stepped Coupon"--A New Method of Structuring Bond
Issues
...Arch W. Roberts and J.,Allan Rudolph
Loans-to-Lenders Revenue Bond Financing for Multifamily Rental
Housing in California
...Peter J. Ross
Tax-Exempt Commercial Paper: An Innovative Financing Technique
...Christian McCarthy
Credit AnaLysis Overview: General Guidelines in the Analysis of
Municipal Bonds
...Sylvan G. Feldstein
Index to Volume 2
publication of PANEL.PUBLISHERS
: be to the Stepped Coupon we i i /23
erwhelmingly advantageous to
te market-place will be swift and ! I
Loans-to-Lenders
Revenue Bond FinanCing for
Multifamily Rental Housing
in California
PETER J. ROSS
I. O,erview .
A. Introduction
This article describes a plan of f'mancing whereby certain California
governmental bodies can stimulate the development of multifarnily rental
housing within their respective U:rrltorial boundaries through the issuance
of tax-exempt revenue bonds. In essence, the plan seeks to pass the-lower
borrowing costs of such issuers through to developers of multifamily rental
property. As a result, loans could be made available to developers at a rate
significantly below conventional market rates. The lower interest rates
should reduce overall project development costs and may enable developers
to charge rents which are low enough to. be competitive for the area, yet
sufficient to be profitable. '-:
B. Eligible Issuers
Eligible issuers (the "issuers") for the loans-to-lenders program
described herein divide into three categories: (I) charter cities; (2)
PETER J. ROSS is an associate with the law firm of Manatt, Phelps, Rothenherg & Tunney,
(San Francisco office). Formerly, he was with LeBoeuf. Lamb, Leiby & MacRam. He is a
graduate of Yale University and attended law school at Emory, in Atlanta, Georgia.
The author wishe~ to acknowledge the assistance of Harold E. Rosers, Jr., partner in Manatt,
Phelps, Rothenherg & Tunney, in the preparation of this article.
24 / Municipal Finance Journal i.
redevelopment agencies; and (3) the City of Los Angeles. General law cities
and counties presently are not authorized to issue bonds for multifamily
rental housing; however, both houses of the state have approved legislation
which, if signed, into law by the Governor, would .permit the issuance of
such bonds.
C. 'Eligible Housing Developments
The location, size and occupancy standards of the rental housing projects
to be financed-with revenue bonds may be set by the Issuer, subject to
~ tax and state law requirements. Under federal tax law, 20 percent of
aH rental units financed with bond proceeds must (1) be occupied by tenants
having incomes not exceeding 80 percent of the median income for the area
as determined..by HUD and (2) be available at an annual rental not
exceeding 3Oo. ercen_.t of the maximum annual income level of such tenants.
In'the case o_f_"_targeted area projects" (as defined in Section 103A(k) of the
Internal Revenue Code of 1954, as amended), the 20 percent requirement
may be reduced to 15 percent. These requirements must be maintained for a
period of at least 20 years after the rental units are available for occupancy
(not after the bonds are issued). State law and local ordinances may add
further restrictions, aH of which could adversely affect the ability of de-
velopers to generate sufficient rental income to justify development
costs--even with reduced borrowing costs.
D. General Structure
Basically, the Issuer would issue its revenue bonds and loan a major
portion of bond proceeds to one or more financial institutions (the
"Lenders")' to fund construction and permanent loans to developers of
multifamily rental housing projects (the "Developers"). Accordingly, two
sets of loans are involved: (I) the loan of bond proceeds to the Lenders (the
"Lender Loans") and (2) the Lender's loans to the Developers (the
"Developer Loans"). Principal of and interest on the bonds are payable
from payments of the Lender Loans; principal of and interest on the Lender
Loans, in turn, are payable from payments of the Developer Loans.
The bonds, the Lender Loans and the Developer Loans will have parallel
payment provisions and each will have terms of 10- 12 years. A loan with a
10- 12 year term is considered a permanent financing, yet the interest costs
of such loan are significantly less than those associated with longer term
financings. The payment schedule of each loan will be based on a permanent
amortization schedule of 30-40 years, with a balloon payment in the
tenth or twelfth year. Accordingly, the large portion of each loan will not be
due until the housing projects have been in operation for several years and
have had an opportunity to develop a positive cash flow.
I, Eligible Lenders include commercial banks, savings and loan associations, savings
banks and insurance companies. '~'
Loans-to-Lenders Revenue Bond Financing / 2S
os Angeles. General law cities ~ The bonds will never constitute a debt or liability of the Issuer. They are
~ issue bonds for multifamily payable solely from the revenues and assets pledged therefor, principally
rate have approved legislation from repayments of the Lender Loans. Although the Lender Loans
would Permit the issuance of ~ constitute a general obligation of each Lender, that obligation alone usually
~ is not sufficient to secure an "AAA" rating on the bonds, necessary for
~ marketing purposes. Thatrating may be obtained by two principal means:
~ (I) a letter of credit or similar obhgation of a financial institution having an
~ "AAA" credit rating and/or (2) the coliateralization of the Lender Loans
of the rental housing projects ~ with certain other mortgages or federal direct or guaranteed securities, each
set by the Issuer, subject to having a value substan6nily in excess of the relevant Lender Loans. The "AAA" '
; federal tax law, 20 percent of
mst (1) be occupied by tenants rating will reduce the Issuer's borrowing costs, and this reduction will be
passed through to the Developer.
!he median income for the area
tble at an annual rental not
1 income level of such tenants. H. State Bonding Authorization
fined in Section 103A(k) of the for Eligible Issuers
$), the 20 percent requirement
bents must be maintained for a A. Charter Cities
its are available for occupancy Charter cities are empowered to issue revenue bonds for multifamily
md local ordinances may add rental housing if the city charter incorporates the home rule provision of
.~rsely affect the ability of de- Article XI, Section $(a) of the California Constitution. That section autho-
:ome to justify development rizes charter cities, in the a. bsence of any charter restrictions to the contrary,
to make and enforce all laws respecting "municipal affairs":
It shall be competent in any city charter to provide that the city governed
hue bonds and loan a major . thereunder may make and enforce all ordinances and regulations in res-
peet to municipal affairs, subject only to restrictions and limitations
~e financial institutions (the
provided in their several charters and in'respect to other matters
~anent loans to developers of
they shall be subject to general laws ....
~velopers."). Accordingly, two '
id proceeds to the Lenders (the The scope of a charter city's local autonomy, i.e., the definition of
oans to the Developers (the "municipal affairs," is determined by the courts on a case-by-case basis. No
rest on the bonds are payable court has decided whether issuance of revenue bonds for multifamily housing
il of and interest on the Lender is a municipal affair. Under accepted analysis, the home rule grant should
' the Developer Loans. be considered sufficiently broad.
:loper Loans will have parallel Courts seem to apply a two-step apprOach in determining whether a
of 10- 12 years. A loan with a charter city's local ordinance is protected by Article XI, Section 5(a). First, they
mancing, yet the interest costs examine the state and local laws to determine if any conflict exists between
;e associated with longer term them. Conflicts have been found in the following instances: where the two.
n will be based on a permanent laws were inconsistent with each other, see, e.g., Sonoma County, etc. v.
itha balloon payment in the County of Sonoma, 23 CaL 3d 296 (1979); where local law duplicated a
portion of each loan will not be state provision, see, e.g., Pipoly v. Benson, 20 Cal. 2d 366 (1942); and where
~peration for several years and the state legislature has evidenced an intent to preempt the field, see, e.g.,
.~cash flow. Bishop v. City of San Jose, ICal. Rptr. 56, 63 (1969); Redevelopment
Agency v. City of Berkeley, App. 143 Cal. Rptr. 633 (1978). In the absence
rings and loan associations, savings of a conflict, both the local and state law should be upheld.
26 ? Municipal Finance Journal
In the event of a conflict, courts will then inquire into the nature of the
matter that the local law seeks to regulate. If the matter is a municipal
affair; the local law will be upheld. See Sonoma County, supra. If the local
law infringes on a matter of statewide concern, the local law will be invali-
dated. See generally, David, California Cities and the Constitution of 1879:
General Laws and Municipal Affairs, 7 H.C.L.Q. 643 (1980), Sato, "Munici-
pal Affairs" in California, 60 Cai. L. Rev. 1055 (1972). Courts have upheld
local laws with extraterritorial effect as long as their impact upon matters of
statewidc concern was not "serious." See, e.g., Weekes v. 'City of Oakland,
21 Cal. 3d386 (1978) (involving a local occupation tax).
Although the California legislature has enacted a number of laws
providing for the issuance of revenue bonds for multifamily rental housing
(see, e.g., Cal. Health & Safety Code §§33750, et seq. (Deering); id.
§§52055-56), it has not evidenced an intent to preempt the multifamily
rental housing field. In at least one instance the state expressly has
recognized and preserved the fight of charter cities to issue revenue bonds
for multifamily rental housing purposes. One such legislative pronouncement
appears in Section 52053(b) of the Health & Safety Code concerning the
power of local housing finance agencies to issue revenue bonds to provide
long-term mortgage financing:
[N]othing in this subdivision shall affect the authority conferred upon a
charter city by its charter to issue revenue bonds to undertake a program
of long-term mortgage financing for multifamily rental housing.
Similarly, in A.B. 665, currently awaiting the Governor's approval, the
legislature has stated:
[T]he provisions of this chapter shall not be construed to limit or other-
wise restrict the authority of chartered cities to issue bonds for the pur-
pose of financing the construction or development of multifamily rental
housing...*
In light of the above legislative expressions, a court could not' reasonably
find that the .state has evidenced an intent to preempt the field of
multifamiy rental housing. Accordingly, state law cannot be said to restrict
the issuance of multifamily rental housing revenue bonds by charter cities.
In the unlikely event t-hat a conflict with state law is perceived, a court
nonetheless may uphold a local ordinance on grounds that the issuance of
revenue bonds for multifamily rental housing purposes is a "municipal
affair" protected against inconsistent state laws by the home rule grant.
Such a finding is supported by those cases which hold that the procedure
for the issuance of revenue bonds is a municipal affair. See, e.g., Fritz v.
City and County of San Francisco, 132 Cal. 373 (1901), City of Santa
Monica v. Grubb, 245 Cal. App. 2d 718 (2d Dist. 1966). See generally,
Sato, supra at 1080..As additional support, analogy can be made to the muni-
cipal tax cases which have established a strong po~licy of home rule fiscal
* If signed by the Governor, A.B. 665 would enable ali cities--general law and charter--to
issue revenue bonds for multifaraily rental housing~
Loans-to-Lenders Revenue Bond Financing / 27
I inquire into the nature of the
autonomy. See, e.g., Igc, ekes v. City ofOaicland, 21 Cai. 3d 386 (1978); Ex
, :If the matter is a municipal ~
.~ flarte Braun, 141 Cal. 204 (1903).
ma County, supra. If the local ~ The bonds of charter cities and the Projects to 'be financed therewith arc
rn, the local law will be invali- :'~ subject only to federal tax law requirements, unless the charter itself or the
rand the Constitution of 1879: ~' local ordinance enacted thereunder adds further restrictions, As a result of
,.Q. 643 (1980L Sato, "Munici- :~
)55 (1972). Courts have upheld "?~ this'flexibility, charter cities are the most desirable issuing entities of
revenue bonds for multifamily rental homing.
~s their impact upon matters of
~., Weelces v. City of Oalcland, ..: B. Redevelopment Agencies
ation tax). .:
Redevelopment agencies are empowered 'to issue revenue bonds for
~ enacted a number of.laws
multifarnily rental housing pursuant to the provisions of S.B. 99, codified at
for multifamily rental housing Cal. Health & Safety Code §§33750 et seq. (Deering). The enabling
i33750, et seq. (Deering); id. language is contained in Section 337611 which provides: "An agency may
tt to preempt the multifamily issue revenue bonds for the purpose of irmancing residential construction
tance the state expressly has authorized by this chapter .... "Although not expressly provided, it is
tr cities to issue revenue bonds reasonable to presume that rental housing is contemplated within the
'~ such legislative pronouncement def'mition of "residential construction." "Residential construction" refers
& Safety COde concerning the only to "residences," the definition of which' includes mUltifamily
issue revenue bonds to provide residential structures, but does not distinguish between rental and owner-
occupied dwellings. Id. §337530).
: authority conferred upon a
~nds to undertake a program The housing projects financed under S.B. 99 must satisfy the occupant- .
~.nilyrental housing, eligibility requirements .prescribed by Sections 33760 and 33760.5. The
applicability of these requirements depends upon whether the project is
~ the Governor's approval, the
located' within or outside a "project redevelopment area.''2 If the rental
~ construed to limit or other- project is located within a project redevelopment area, there are no
~ to issue bonds for the put- restrictions as to occupant eligibility. If the project is located outside a
~pment of multifamily rental project redevelopment area, all occupants must be "eligible for financial
assistance specifically provided by a governmental agency for the benefit of
occupants of the residence." Id. §33760.
s, a court could not' reasonably Section 33760.5 attempts to ease some of the hardships created by Section
ent to preempt the field of 33760 for redevelopment agencies operating in jurisdictions having a
te law cannot be said to restrict population in excess of 600,000 persons. Such agencies may finance
venue bonds by charter cities, multifamily rental housing developments outside a redevelopment project
state law is perceived, a court area for persons of low or moderate income~ provided that (1) 20 percent of
a grounds that the issuance of the rental units are committed to lower-income households· and (2) 10
~ing purposes is a "municipal percent of such units are committed to very low-income households. Section
laws by the home rule grant. 33760.5 further provides that the above .restrictions will not apply if federal
which hold that the procedure rent subsidies become unavailable. At present, these special provisions have
icipal affair. See, e.g., Fritz v. effect only until January 1, 1983, unless extended by statute.
iai. 373 (1901), City of Santa
!2d Dist. 1966). See generally, ' 2. A "redevelopment project area" means a project area as defined by Gal. Health &
IaJogy can be made to the muni- Safety Code §33320.1 for which a redevelopment plan has been adopted by ordinance pursuant
iong policy of home rule fiscal to Section 33365 of that Code. Project areas must be located in blighted areas and must be
selected by a planning commission for the community.
all citiesmgeneral law and charter--to I 3. "Low or moderate income" is defined as 120 percent of the area median income. Cal.
Health & Safety Code §33760.5(b)(Deering). '
28 / Municipal Finance Journal
As a practical matter, it may be very difficult to finance multifamily
rental housing developments with bonds of redevelopment
agencies--whether or not such developments are' located within
redevelopment project areas. The restrictions added by S.B. 99 may severely
curtail the ability of a housing project to generate sufficient rental income
to justify development costs. In the case of housing developments in
redevelopment Project areas, the blighted conditions of such areas may
force rents to be too low. On the other hand, rental income from housing
developments outside project areas will be reduced by virtue of the more
stringent occupant-eligibility requirements.
C. City of Los Angeles
SeCtion 52055 of the Health & Safety Code specifically authorizes cities
with populations exceeding 2,000,000 persons to issue revenue bonds for
multifamily rental housing. At present, only the City' of Los Angeles
qualifies. Section 52055 sets forth only one.minor limitatiOn on the housing
projects to be financed thereunder: the rental units must be occupied
by persons of low and moderate income.
Until December 31,1981, counties' with populations exceeding 4,000,000
persons were empowered to issue revenue bonds for multifamily rental
housing pursuant to the' conditions of Section :52056 of the Health & Safety
Code. The "sunset" 'provision of Section 52056, however, .was not
extended. Accordingly, Section 52056 no ~l°nger ProVides bonding
authorization for multifamiiy rental housing.
D. A.B. 665'
At present, general law cities and counties have no bonding autho _rizati.on
for mulfifamily rental housing. A.B. 665, if signed into law by the Governor,
would provide that authorization. In addition, charter cities would be per-
mitted to avail themselves of the provisions of A.B. 665. Accordingly, A.B.
665 would moot any questions concerning the authority of charter cities to
issue revenue bonds for multifamily rental housing.
The requirements of A.B. 665 parrot those set forth in Section
103(b)(4)(A) of the Internal Revenue Code. By definition, then, under
current laws, a tax-exempt revenue bond for muitifamily residential housing
would qualify under A.B. 665,' subject to the restrictions of A.B. 665 on
the aggregate amount of multifamily rental housing bonds which may be
issued.~
4. However, since the provisions of Section 103(bX4)(A) arc not incorporated by rcference,
A.B. 665 would be unaffected by an easing of the restrictious for federal tax-exemption.
5. As an alternative means of financing multifamily rental housing, A.B. 665 permits cities
and counties to contract with the California Housing Finance Agency ("CHFA") to sell the
bonds of such city or county and to operate.a program to fund construction and mortgage
loans for multifamily rentnl housing developments within such city or county. This alternative
subjects thc management and construction of all developments financed thereunder to the
supervision of the CHFA.
Loans-to-Lenders Revenue Bond Financing / 29
~fficult to finance multifamily A.B. 665 also allows cities and counties to apply not more than 10 percent
bonds of redevelopment of bond proceeds to the development of commercial property for lease.6
~pments are located, within Such commercialproperty must be located on the same parcel as, or the
~ added by S.B. 99 may severely parcel adjacent to, a multifamily rental housing development. Any rents
:nerate sufficient rental income ' collected therefrom in .excess of payments necessarY for debt service, oper-
~ of housing developments in ating expenses and required reserves must be applied to reduce the rent
conditions of such areas may charged on units reserved for lower-income and very low-income households.
:d, rental income from housing . A.B. 665 limits the aggregate amount of bonds which may be issued for
reduced by virtue of the more ~ multifamily rental housing purposes to $900,000,000. This ceiling applies
whether or not such bonds were issued pursuant to A.B. 665 or any other
provision of law, including a city charter.
By its terms, A.B. 665 would remain in effect until January 1, 1984,
~de specifically authorizes cities unless extended by a later enacted statute.
~ns to issue'revenue bonds for
~nly the City of Los Angeles E; Local Housing Authorities
minor limitation on the housing Local housing authorities of cities and counties created under the
rental, units must be occupied Housing Authorities Law, Cal. Health & Safety Code §§34200 et seq. are
opUlations exceeding 4,000,000 permitted to finance primarily slum clearance or low-rent housing for persons
bonds for multifamily rental of low income. Absent subsidization, such housing projects would not be
financially feasible; the rental income generated thereby could not pay
~n 52056 of the Health & Safety development costs.
On 52056, however, was not In addition, voter approval may be required for all such bonds of a local
ino longer provides bonding housing agency. Under Article XXXIV of the California Constitution, state
g' public bodies are prohibited from developing, constructing or acquiring
low-rent housing projects without voter approval. Although the state
legislature has exempted from this restriction privately owned developments
. have no bonding authorizatign in which not more than 49 percent of the rental units are available to
igned into law by the Governor, persons of low income, the projects to be financed by local housing
on, charter cities would be per- authorities may not fall within this exception. There is, however, greater
of A.B. 665. Accordingly, A.B. probability that this exception would apply to the bonds of the other
~he authority of charter cities tO issuers.
ousing.
: those set forth in Section F. The RentalHonsingConstmctionProgram
e. By definition, then, under
The Rental Housing Construction Program, described in Sections 50735
multifamily residential housing
:he restrictions of A.B. 665 on et seq. of the Health & Safety Code, provides additional authority'pursuant
housing bonds which may be to which cities, counties and redevelopment agencies can issue bonds to
finance multifamily rental housing projects. However, such issuers must
first apply to and receive a commitment from the Department of Housing
)(A) are not incorporated by reference,
restrictions tbr federal tax-exemption.
~ rental housing, A.B. 665 permits cities
Finance Agency C'CHFA") to sell the
tm to fund construction and mortgage 6. This i0 percent limit reflects the Internal Revenue Code requirement that 90 percent
~in such city or county. This alternative ("substantially all") of the proceeds of any industrial development bond be used to provide the
relopmcots financed thereunder to the exempt facility (i.e., me housing developments). ~ Treas. Reg. § 1.103-8(a}(1).
30 / Municipal Finance Journal
and Community Development for an allocation of funds before such bonds
can be issued'. Accordingly, the program neither provides certain bonding
authorization for local issuers, .nor, in the case of charter cities,
meaningfully expands the already existing authority to issue multifamily
rental housing revenue bonds.
m. Federal Tax Exemption
The tax exemption of revenue bonds for multifamily rental housing is
provided in Section 103(b)(4)(A) of the Internal Revenue Code of 1954. At a
minimum, such bonds must comply with this Section and the regulations
thereunder, regardless of any requirements imposed bY state bonding acts.'
Section 103(b)(4)(A) of the Code, as amended by the Mortgage Subsidy
Bond Tax Act of 1980, permits tax-exempt f'mancing for residential rental
property if individuals of "low or moderate" income are to occupy at least:
(1) 15 percent of the rental units in the case of. "targeted area projects" or
(2) 20 percent of the rental units in the case of any other project. "Low or
moderate-income" is defined by Section 167(k)(3)(B) of the Code, which
incorporates the standards set for Section 8 of the United States Housing
.Act of 1937, as income not exceeding 80 percent of the median income area
as determined by HUD. "Targeted area residences" is defined in Section
103A(k) of the Code as a residence which is in (1) a qualified census tract
(where 70 percent of the families in the tract have incomes which are 80
percent or less than the statewide median) or (2) an area of chronic '
economic distress' (as designated by the state and approved by the Secretary
of HUD). Under Section 103(b)(4)(A) of the Code, this 20-percent/15-per-
cent test must be satisfied for a period of at least 20 years following the
completion of the housing project, whether or not the bonds are
outstanding.
The rental housing projects to be financed With tax-exempt revenue bonds
also must qualify as "residential real property" under Treas. Reg. '§1.103-
8Co). Thus, the housing facilities must be available for public use and
consist of complete living units, with living, sleeping, eating, cooking and
sanitation facilities, which are not used on a transient basis.
IV. Detailed Analysis of Financing
A. Financing Documents
As stated earlier, a loans-to lenders financing involves two sets of loans:
(1) the loan of bond proceeds to the Lenders, and (2) the Lender's loans to
7. The bonds also must comply with the arbitrage provisions of Section 103(c) and those
provisions which apply to industrial development bonds generally.
Loans-to-Lenders Revenue Bond Financing / 31
Lion of funds before such bonds the Developers. These transactions necessitate three types of financing
either provides certain bonding documents: two with respect to each loan and a third with respect to the
the case of charter cities, bonds. In addition; if a letter.of credit or similar obligation is obtained as
authority to issue multifamily added security for the payment of the bonds, a fourth set of financing
documents would be required.
The following is a description of the basic documents contemplated by a
~emption multifamily loans-to-lenders financing secured by a letter of credit.
DOCUMENT DESCRIPTION
r multifamily rental housing is
BOND (1) Trust Indenture Agreement between the Issuer and
'nai Revenue Code of 1954. At a
his Section and the regulations DOCUMENT trustee for the bondholders (the
imposed by state bonding acts.' "Trustee"). Issuer agrees to repay
bonds from available funds and
~nded by the Mortgage Subsidy l~dges program asse~ and revenues
financing for residential rental to the Trustee as security.
"income are to occupy at least:
LETTER OF (2) Application for Application by Issuer to letter of
:of "targeted area projects" or CREDIT Lettcr of Credit credit bank to issue letter of
'of any other project. "Low or DOCUMENTS credit.
57(k)(3)(B) of the Code, which
] of the United States Housing' (3) Letter of Credit Agreement by letter of credit bank.
cent of the median income area unconditionally and irrevocably to
,sidences" is defined in Section pay principal of and interest on the
bonds. Issued to the Trustee for the
s in (1) a qualified census tract
~ct have incomes which are 80 benefit of the bondholders.
,n) or (2) an area of chronic LENDER (4) Lender Loan Agreement between Issuer and
LOAN Commitment Lender. Lender commits to orig-
: and approved by the Secretary DOCUMENTS Agreement inate, and Issuer agrees to allocate
e Code, this 20-percent/l 5-per-
~ to such Lender, specified principal
at least 20 years following the
r amount of loans. Al~ement is
.ether or not the bonds are entered into before the bonds are
issued.
~ with tax-exempt revenue bonds ($) Lender Loan Agreement between Issuer and
irty" under Treas. Reg. §1.103- Agreement Lender providing for the actual loan
.' available for public use and of bond proceeds. Lender's obliga-
i, sleeping, eating, cooking and tion to repay the loan is evi-
.transient basis, denced by a note which will be en-
dorsed by Issuer to the Trustee.
of Financing (6) Reimbursement Agreement between Issuer and
Agreement Lender obligating Lender to reim-
burse letter of credit bank for any
draws made by Trustee under the
~cing involves two sets of loans: letter of credit.
:s, and (2) the Lender's loans to DEVELOPER (7) Deed of Trust Agreement by Developer to grant
LOAN a ilen on and security interest in the
provisions of Section 103(c) and those DOCUMENTS housing project to a Deed of Trust
~ generally, trustee on behalf of the Lender.
32 / Municipal Finance Journal.
(8) Developer Note Mortgage Note by Developer to the
Lender evidencing obligation to re-
pay the Developer Loan.
(9) Regulatory Agreement between the Developer,
· : ' Agreement Trustee and Issuer relating to the
" permitted use of the housing de-
ve~~pment. Regulatory Agreement
:"~" is necessary to ensure tax exemp-
tion of the Bonds.
(10) Special Warranty Agreement by Developer (i) to
· Deed and Deed comply with occupant-eligibility
Restrictions r, quiremems for a period of twenty
years and (ii) to maintain property
as residential real property during
lifetime of bonds. Agreement runs
with the land and is binding upon
any subsequent owner of the
.: housing project.
B. The Bonds
1. General
The bonds will be issued in an amount sufficient to fund all of the Lender
Loans, to pay issuance costs, and to fund a debt service reserve fund for the
bonds. The actual size of the bond issue thus will depend upon the principal
amount of loans each Lender commits to make to Developers. The interest
rate on the bonds will be based on current rates at the time of marketing.
The obligations of the Issuer relating to the bonds will be contained in a
Trust Indenture with a qualified bank or institution acting on behalf of the
bondholders (the "Trustee"). In particular, the Trust Indenture will: (1)
pledge and assign all available funds and assets to the Trustee as security for
the bonds; (2) Create various funds through which project revenues will
flow; (3) set forth payment and repayment provisions; and (4) define events
of default under which the Trustee can draw upon the letter of credit or
other security for the bonds.
2. Security for the Bonds
The bonds are payable from and secured by three sources of revenues: (1)
repayments of the Lender Loans; (2) moneys held by the Trustee in the
various funds and accounts created under the Trust Indenture; and (3)
moneys drawn by the Trustee under the letter of credit (or other security
obligation) and/or other collateral pledged to the payment of the bonds.
The primary source of payment for the bonds is the repayments of the
Lender Loans pursuant to individual Lender Loan Agreements. The
Loans-to-Lenders Revenue Bond Financing / 33
Mortgage Note by Developer to the maturity and payment provisions of the bonds and Lender Loans .will be
Lender evidencing obligation to r~- virtually identical; prepayments of the Lender Loans will trigger pre-
pay the Developer Loan. payments of the bonds.
Agreement between the Developer, In the event that payments received from the Lenders are insufficient to
Trustee and Issuer relating to the meet debt service on the bonds, the Trustee may withdraw moneys from the
permitted use of the housing de- various funds and accounts established under the Trust Indenture. The
velopment. Regulatory Agreement Trust Indenture will Set forth the order in which such funds and accounts
is necessary to ensure tax exemi>- may be so used. A Debt Service Reserve Fund.usually will be established to
tion of the Bonds. pay at least six months' to one year's interest on the bonds?
Agreement- by Developer (i) to The ultimate security behind the bonds is the letter .of credit or.similar
comply with occupant-eligibility obligation from a bank having an "AAA" rating and/or collateral pledged
req~ents for a period of twenty by Lenders in the form of certain mortgage 'loans or/federal securities
years and (ii)to maintain property having a market value substantially in excess-of the Lender Loan. The
as residential real property during actual collateral requirements will be dictated by the rating agencies and/or
lifetime of bonds. Agreement runs the bank.
with the land and is binding upon A loans-to-lenders financing may be structured to permit the bondholder-
any subsequent owner of the (or the trustee acting on his behalf) to claim against the letter of credit or
housing project, the pledged collateral, or both, in the event of default. If the bondholders
can claim' against the pledged collateral, the aggregate yield thereon is
limited by the arbitrage rules to the yield On the bonds. ,~e Rev. Rul~ 78-348
(1978). This restriction necessitates the periodic revaluation of the collateral,
since its yield continually changes. However, if the collateral is pledged
~fficient to fund all of the Lender solely for the benefit of the letter of credit bank and the bondholders
a debt service reserve fund for the can proceed only against the letter of credit, then the problems associated
bus will depend' upon the principal with collateral would be eliminated. This is the preferable alternative.
make to Developers. The interest
rates at the time of marketing. $. Funds
~ the bonds will be contained in a The tYPical loans-to-lenders financing requires the .establishment'and
titution acting on behalf of the maintenance of the following funds:
, the Trust Indenture will: (I)
tssets to the Trustee as security for FUND SOURCE AND PURPOSE OF FUND
)ugh which project revenues will (1) Loan Fund Funded from bond proceeds and early prepayments
it provisions; and (4) define events of Lender Loans. Applied to make Lender Loans and,
draw upon the letter of credit or after 3 years from date of the bonds, to redeem the
bonds. For convenience, Loan Fund may be divided
into (1) separate "Lender Loan Accounts" and (2) a
I Contingency Account. in the event a commitment to
~ originate a Developer Loan is not fulfilled.
d by three sources of revenues: (I) (2) Cost of Issuance Funded from bond proceeds~ Applied to pay issuance
oneys held by the Trustee in the Fund costs, including legal fees, printing expenses~ etc.
ter the Trust Indenture; and (3)
letter of credit (or other security
~ to the payment of the bonds. 8. If the Trustee is able to draw immediately under the letter of credit or other security for
.~ bonds is the repayments of the the bonds, the need for a Debt Service Reserve Fund may be obviated. Indeed,such Fund may
Lender Loan Agreements.. The no longer be "reasonably required" within the meaning of Seclion 103(c) of the Internal
Revenue Code. In such instance, moneys in such Fund could not be invested at unrestricted
yield, thereby causing the Fund to become superfluous.
34 / MuniCiPal Finance Journal
(3) Revenue Fund FuMed from pa)menu and ~most prepayments of
. Lender Loans, and investment income from other
funds. Amounts representing prepayments of.
Lender Loans are used to redeem bonds. Other
amounts are used to pay program expenses, principal
and interest on the bonds, and to fund any deficien-
'cies in the Debt Service Reserve Fund.
(4) Debt Service Funded from bond--Proceeds in an amount sufficient
Reserve Fund to pay six months' to one year's interest on the bonds
in the event of default.
(5) · Bond Fund FUnded from transfers from the Revenue Fund and
Debt Service Reserve Fund. Applied to pay .debt
service on the bonds. For convenience, Bond Fund
may be divided into separate Interest, Principal and
Redemption Accounts.
C. The Letter of Credit
The letter of credit would be issued to the Trustee on behalf of the
bondholders in an amount sufficient to pay when due, total principal of,
premium, if any, and interest on the bonds. The Trustee would be entitled
to draw on the letter of credit to pay debt serVice on the bonds in the event
of default in the payment of a Lender Loan. Upon each draw, the letter of
credit bank would have recourse against: (1) the defaulting Lender; (2) the
collateral pledged by such Lenders; and (3) program revenues and assets
held by the Trustee. These rights would be specified in the Application for
Letter of Credit by the Issuer and in the Reimbursement Agreement
between the letter of credit bank and the Lender.
The letter of credit bank generally will charge between 50 to 100 basis
points each year for its credit. This premium is a program expense, payable
from the "spread" between the interest rate on the bonds and the interest
rate on the Lender Loans.
An alternative to a letter of credit security arrangement is a Collateral
Purchase Agreement among the. Issuer, the Trustee and a financial institu-
tion having an "AAA" credit rating. Under this alternative, in the event of
a default by a Lender in the repayment of the Lender Loan, the Trustee
would have the right to sell, and the financial institution would be required
to purchase, the collateral securing the defaulted Lender Loan. The
purchase price would be an amount at least equal to the principal amount of
the Lender Loan then outstanding, plus one year's interest thereon. The
initial commitment and annual fee of such financial institution may be
lower than the fee on a letter of credit. However, the Collateral Purchase
Agreement will involve problems of valuing and revaluing collateral.
Loans-to-Lenders Revenue Bond Financing/35
nnents and most prepayments of D. The Lender Loans
Nd investment income from other The Lender Loans will be made to each Lender in an amount equal to its
~representing prepayments of commitment to origiuate Developer Loans. That commitment must be
le used to redeem bonds. Other entered into prior to the issuance of the bonds since it largely will determine
~opay program expenses, principal
~ bonds, and to fund any deficien- the size of the bond issue. As security for its commitment, each Lender will
iceReserve Fund. be required to pay a non-refundable commitment fee~ equal to approx-
imately 2 percent of the principal amount of its commitment. The
~ proceeds in an amount sufficient commitment also will require that the Lender enter into a ~ubstan-tial
to one year's interest on the bonds binding obligation to make a Developer Loan Within six months after
tult. issuance of the bonds. This is a requirement for the tax exemption of the
s fers from the Revenue Fund and bonds. See Treas. Reg. § 1.103-14(b)(3).
:rye Fund. Applied to pay debt The Lender Loan will be made pursuant to a Lender Loan Agreement with
ids. For convenience, Bond Fund the Issuer. That Agreement will require the proceeds of the Lender Loan to
to separate Interest, Principal and be used for Developer Loans and will set forth the payment and prepayment
mrs. terms'° of the Loan and other agreements of the Lender. The interest rate
on the Lender Loan will be approximately five-eighths of 1 percent more
than the interest rate on the bonds. The Lender's obligation to repay the
Issuer will be evidenced by a note.
the Trustee on behalf of the Assuming a letter of credit is used to secure the bonds, each Lender would
y when due, total principal of, enter into a .Reimbursement Agreement with the letter of credit bank as a
· The Trustee would be entitled condition of receiving a Lender Loan. Under that agreement, the Lender
.~rvice on the bonds in the event would pledge to such bank collateral iff the form of certain federal securities
Upon each draw, the letter of and/or mortgages in consideration of the bank's issuance of its letter of
the'defaulting Lender; (2) the credit. As noted earlier, the requirements for the value of the pledged
program revenues and assets collateral will be set by either the letter of credit bank, the rating agency
~ecified in the Application for for the bonds, or both, depending upon whether the bondholders can claim
ae Reimbursement Agreement against that collateral.
tder;
:barge between 50 to I00 basis E. The Developer Loan
is a program expense, payable
on the bonds and the interest As the final step in the financing, the proceeds of the Lender Loans will
be loaned to individual developers to construct multifamily rental housing
ty arrangement is a Collateral projects. Each Developer Loan will be secured by a deed of trust on the
Trustee and a financial institu- project and will be evidenced by a note to the Lender in the principal
this alternative, in the event of amount of. the Loan. As noted earlier, the payment and prepayment
the Lender Loan, the Trustee provisions of the Developer Loan will correspond to those of the Lender
ti institution would be required Loan.
defaulted Lender Loan. The .. The rate of interest on the Developer Loan will be approximately 1
:qual to the principal amount Of percent more than the rate of interest on Lender Loans. In addition, the
ae year's interest thereon. The Developer may be charged a loan origination fee'of approximately 2
/~ financial institution may be
wever, the Collateral Purchase
tnd revaluing collateral.
9. The commitment fee will be refundable only if the bonds are not issued by a certain date
or at less than a specified interest rate.
10. As noted earlier, these provisions will parallel the terms of the bonds.
36 / Municipal Finance Journal
lxn'eent, an annual servicing fee of approximately one-eighth of 1 percent and
customary recording and title fees. These fees and the security interest in the
projects will inure solely to the benefit of the Lenders and not to the
bondholders or the Issuer.
As noted earlier, operation of the housing developments must comply with
federal law and state law requirements throughout the lifetime of the bonds
and, in the case of tenant eligibility requirements, for a period of twenty
years following the completion of the project. These requirements are enforced
by means of two documents: (1) the Regulatory Agreement and (2) the
· Special Warranty Deed .and Deed Restrictions. The Regulatory Agreement
is the agreement of the Developer with the Issuer and Trustee to conform
the rental housing projects to federal tax and state law standards. Upon
a default of that Agreement, the Issuer or the Trustee will be able to re-
quire the Lender to accelerate payment of the deed of trust note and to
:.. foreclose on the deed of trust. In addition, the Issuer may be able to lease
::,~.~ the rental units at a nominal rent.
The Special Warranty Deed and Deed Restrictions enable the
":" enforcement of the 20-percent/15_percent tenant-occupancy requirement
::,:i'- for a period of twenty years after completion of construction, The Deed
Restrictions "run" with, and are an encumbrance on, the land and will bind
the Developer and any subsequent owner of the project.
V.. Conclusion
Although legal mechanisms presently exist under California and federal
Statutes for the issuance of municipal bonds to finance multifamily rental
housing, occupancy restrictions and unfavorable interest rates have thus far
severely curtailed the use of such financing. Hopefully, with the enactment
of more liberal legislation presently being considered, an upturn in the econ-
omy and lowering of interest rates, such multifamily rental housing finan-
cing will become more prevalent. '
MANATT, PHELPS, ROTHENBERG & TUNNEY
THOMAS D. PHELPS* PETER ~ PAtErNO ARN h. TELLEM 1666 CENTURY PAR~/~' ~T II~VIN JAY DEUTCH,
.......................................... LOS ANGELES, CA 90067 ~ R l~ WASHINGTON, D.C. OFFICE
.............................. S .................................... ' n~ $ OFFIce
April 7 ~982
Mr. W.D. Higginbotham
Assistant City Manager - Finance
1501 Truxtun Avenue
Bakersfield, California 93301
Dear W.D.:
I very much appreciated the opportunity to appear
before the Budget and Finance Committee to propose that this
law firm be considered as bond counsel for your proposed
multi-family revenue bond issue. As we discussed, the
underwriter, Bache Halsey Stuart Shields Incorporated,
would prefer that we be bond counsel since this firm has
been working with Bache in the development of this program.
Because of the time that we have spent and the research that
we have already done in this area we are prepared to move
this transaction forward immediately.
For your information, I am enclosing an article
entitled ~oaIns'-'~O-:~e'n'ders''Re've:nue' BOnd Fi:nanCing 'forr
MUl~tifamily Re'ntal''HOUsingi~n~Ca~l~i~fornia by Peter J. Ross
of this firm which has just been published in The Municipal
'Finance'Journal and .sets forth all of the requirements for
structuring a multi-family revenue bond issue. Additionally,
the article makes reference to all of the docUments that
must be prepared on behalf of the City in order tO complete
the transaction. This law firm has already prepared in
draft form all of the documents referenced in the article
which is the reason we are prePared~'to immediately proceed.
I am also enclosing for your information a copy of this firm's
resume.
MANATT, PHELPS, ROTHENBERG ~ TUNNEY
Mr. W.D. Higginbotham
Page. Two
April 7, 1982
.'Once again,~ let me thank~ for your time and
I will look forWard to hearing fr .'o~li~.o~.
Ji_l~ I
Cor~ll~ yours,
Roth~be~g~Tunney
PDK:bas
Enclosures
cc: Thomas A. Reilly,
Bache Halsey Stuart Shields Incorporated (w/enc.)
115 Sansome~l~tl~,ln Francisco, Cali~'o~nia 94104
'" ~'~q~J[ 1~'~',~,.. 415/433-0300
~-" ~ OFFIO£
MEMORANDUM
TO: Mr. Thomas A. P~illy
First Vice President
Bache Halsey Stuart Shields Inc.
FROM: William L. Ramseyer
Executive Vice President
DATE: March 15, 1982
RE: BAKERSFIELD iVlULTIFAMTI,Y RENTAL HOUSING DEMAND STUDY
Enclosed is our study of incremental rental housing demand for the City of
Bakersfield, in accordance with our agreement.
Your conmentS are welcome.
Enclosure
cc: b~r. Philip Kelmar Mr. W. D. Higginbotham
Mr. Jim Hosenfeld
Associates
115 Sansome Street, San Francisco, California 94104
415/433-0300
MEMORANDUM
TO: Mr. Thomas A. Reilly
First Vice President
Bache'Halsey Stuart Shields, Inc.
FROM: Questor Associates
DATE: March 12, 1982
SUBJ: BAKERSFIELD MULTIFAMILY RENTAL HOUSING STUDY
In order to determine the incremental demand for multifamily
rental housing, Questor has analyzed the housing market for
the City of Bakersfield. Questor projects that there will be
an average annual increase in rental housing demand of ap-
proximately 700 units in the City of Bakersfield and 1150
units in the metropolitan area through 1985. The following
determinants were considered in ~ur analysis':
Housing stock characteristics and vacancy trends;
Housing production trends;
Trends in homeownership;
Rent levels;
Consumer housing economics;
Future rental housing production; and,
Population growth.
This report summarizes the analysis of each of these factors
in turn.
I. DEFINING THE MARKET
An important aspect of this study has been to define the
appropriate market for rental housing in Bakersfield. Within
the Bakersfield metropolitan area, as shown in Exhibit I-1,
there is a large amount of unincorporated land. This unin-
corporated area had a population 16% greater than the incor-
porated City in 1980, with approximately the same number of
housing units. To exclude this area from any discussion of
rental housing demand in metropolitan Bakersfield would be to
ignore one-half the available housing and more than one-half
the population.
Furthermore, boundaries between the incorporated and unin-
corporated areas are constantly changing due to annexation.
A table of annexation by the City of Bakersfield since 1970
appears in Exhibit I-2. In some cases, the City, following a
pro-growth attitude, annexed thousands of acres at a time.
These areas were primarily uninhabited agricultural land.
Since the State Legislature passed Proposition 13, however,
the impetus for annexation has generally come from requests
by residents of the inincorporated islands within the City
who desire City services such as trash collection and in-
creased police protection. According to the City of Bakers-
field Planning .Department, there are currently 52 requests
for annexation being considered, the majority of which in-
volve small pockets of unincorporated land. It is likely
that future annexations will involve more occupied housing
units.
In light of these considerations, Questor has analyzed the
rental housing market for both the City proper, and for the
total Bakersfield area (including incorporated and unin-
corporated land). For purposes of discussion, the latter
will be called Metropolitan Bakersfield. The boundaries of
this area are defined in Exhibit I-3.
-2-
Exhibit I' CITY OF.BAKERSFIELD
/ \
INCORPORATED AREA
SOUR( .~..WATS ON CO 19792'
Exhibit 1-2
CITY OF BAKERSFIELD 32XlNEXATIONS
1970 - 1981
Number of
Year Annexations Total Acreage
1970 4 170.1
1971 7 1,339.5
1972 5 528.0
1973 7 1,705.4
1974 6 140.9
1975 1 2.7
1976 7 1,488.2
1977 10 14,075.0
1978 · 10 11,332.0
1979 11 523.5 0
1980 4 444.9
1981 2 457.2
TOTAL 74 32,037.3
SOURCES: Kern County Planning Department, Population and
Housing Report, 1975; City of Bakersfield Planning
Department; Questor Associates.
SEVENTH
·
BRUNDAGE LANE
I
PANAMA LA] ~~ ~, ,.~
Exhibit I-3
METROPOLITAN BAKERSFIELD
PLANNING DEPARTMENT. PANAMA R AD
Various soUrces of information used in this study have
defined differing boundaries of the metrOpolitan area.
Questor has specifically indicated where this is the case,
and provided maps for comparison.
II. HOUSING STOCK CHARACTERISTICS AND VACANCY TRENDS
The housing stock of Metropolitan Bakersfield has increased
from 61,905 units in 1970 to 85,428 in 1980 (see Ex-
hibit II-l). This represents an increase of nearly 38~. This
rate is a more accurate representation of growth than the
separate figures for the City and the unincorporated area,
since annexations may have shifted housing stock groWth
toward the City. The number of housing units in Kern County
increased by 41% during the same period.
The growth of the City's housing stock is primarily due to a
187~ increase in the stock of multifamily housing between
1970 and 1979. The number of single-family housing units
increased 19% over the same period, but declined as a
percentage of total housing units. The fact that the
multifamily housing stock has been increasing so rapidly does
not indicate that the stock of rental housing'has increased
to a corresponding degree. Multifamily housing has tradi-
tiOnally been rented rather than purchased, but in recent
years it has included owner-occupied units such as condo-
miniums. In the Bakersfield area, according to the Board of
Realtors, approximately seven percent of all residential
sales in December 1981 and January 1982 were condominiums. A
portion of the .187% increase in multifamily housing units
since 1970 is attributable to owner-occupied units, though no
figures on the distribution are available. Similarly, not
all single-family homes are owner-occupied.
-6-
Exhibit II-!
HOUSING STOCK TRENDS
METROPOLITAN BAKERSFIELD AND KERN COUNTY
1970 - 1980
Single-Family Multifamily
Units Housing Units Total
Percent~ Percent Mobile Housing
Number of Total Number of Total Homes Units
City of Bakersfield
1970 19,713 80.4 4,718 19.2 81 24,512
1974 20,312 68.5 8,589 29.0 730 29,631
1977 21,480 63.7 11,493 34.1 770 33,743
1979 23,475 61.8 13,547 35.7 936 37,958
1980 NA NA NA 42,752
Unincorporated
Bakersfield
1970 32,763 87.6 2,850 7.6 1,780 37,393
1977 34,190 85.8 4,688 11.8 2,823 39,845
1979 34,612 81.1 4,857 11.4 3,233 ~42,702
1980 NA NA NA 42,676
Metropolitan
Bakersfield
1970 52,476 84.8 7~,'568 12.2 1,861 61,905
1977 55,670 73.8 16,1181 21.4 3,593 75,444
1979 58,087 72.0 18,404 22.8 4,169 80,660
1980 NA NA NA 85,428
Kern County
1970 89,800 81.5 13,642%< 12.4 6,698 110,140
1977 98,525 73.0 23,450 17.4 13,060 135,035
1979 102,478 71.7 25,879 18.1 14,557 142,914
1980 NA NA NA 155,702
NOTE: NA = not available.
SOURCES: U.S. Census, 1970 and 1980; State Department of Finance,
Special Census, 1974 and 1977; Metropolitan Bakersfield,
General Plan, Housing Element, 1980; Questor A~sociates.
The levels of multifamily housing in the City have been
significantly higher than in the unincorporated area. In
1970, 19.2% of the City's housing stock was multifamily,
compared with only 7.6% of the housing stock in unincor-
porated Bakersfield. The number of multifamily units in the
City has grown more rapidly since 1970, with multifamily
units constituting an estimated 35.7% of the City's available
housing, and 11.4% of the housing units in the unincorporated
area. In all cases (the City, the metropolitan area, and the
County as a whole), the proportion of multifamily housing has
been increasing since 1970.
Housing conditionS in the City of Bakersfield and .in the
unincorporated area are comparable, with 74% of the City's
housing stock considered standard, compared with 75.5% of the
housing stock in the unincorporated area. The definition of
buildings considered substandard in the City's General Plan
includes a category of units "in need of minor rehabilita-
tion.'' It should be noted that this term is defined in the
General Plan to include those buildings in need of "painting
or landscaping," and this might be considered too broad a
definition of substandard when considering replacement needs.
If only those buildings which, according to EXhibit II-2 are
"in need of major rehabilitation" or "should be demolished"
are labeled substandard, then 7.8% of the City's housing
stock is substandard compared with 5.4% in the unincorporated
area.
A distribution of the Bakersfield housing stock by age
appears in Exhibit II-3. Approximately 15~ of the City's
housing stock and 13~ of the unincorporated area's housing
stock was built before 1940. Between 1940 and 1969,
17,726 housing units were built in the City (48.5%) compared
with 29,254 units (73.4%) in unincorporated Bakersfield.
During the 1970's, however, 13,446 units were added to the
City's housing stock, while only 5,309 units were added in
-8-
Exhibit II-2
HOUSING CO~DITIONS
~-~fROPOLITA~ ~%/fERSF TET,D
January 1, 1979
Total
City of Unincorporated Metropolitan
Bakersfield Bakersfield Bakersfield
'Number Percent Number Percent Number Percent
Standard 28,100 74.0 32,226 75.5 60,326 74.8
In need of minor
rehabilitation 6,889 18.1 8,174 19.1 15,063 18.7
In need of major
rehabilitation 2,216 5.8 1,793 4.2 4,009 5.0
Should be
demolished 753 2.0 509 1.2 1,262 1.6
TOTAL 37,958 99.9 42,702 100.0 80,660 100.1
Overcrowded
Households* 2,447 6.5 3,064 7.2 5,511 6.8
* Houseliolds with nDre than 1.01 persons per rock.
NOTE: Totals may'not add to'100.0 due to rounding.
SOURCES: Metropolitan Bakersfield, General Plan, Housing Eteme~nt, 1980:
Questor Associates.
Exhibit II-3
AGE OF HOUSING STOCK
METROPOLITAN BAKERSFIELD, 1979
City of Bakersfield Unincorporated
Single-family Multifamily Mobile Total Total
Year Built Number Percent Number Percent Homes Number Percent Number Percent
Before 1940 2,972 14.0 2,368 16.5 7 5,347 14.6 5,300 13.3
1940.- 1949 3,498 16.5 487 3.'4 0 3,985 10.9 6,184 15.5
1950 - 1959 6,377 30.1 703 4.9 18 7,098 19.4 13,334 33.4
1960 - 1969 4,606 21.7 ].,971 13.7 66 6,643 18.2 9,736 24.4
1970 - 1979 3,762 17.7 8,829 61.5 855 13,446 36.8 5,309 13.3
TOTALS 21,215 100.0 14,358 100.0 946 36,519 99.9' 39,863 99.9
NOTE: Totals may not add to 100.0% due to rounding.
SOURCES: U.S. Census, 1970; Metropolitan Bakersfield, General Plan, Housing Element, 1980;
Questor Associates.
the unincorporated area. Thus, while the City has some of
the oldest housing stock in the metropolitan area, it has
also captured most of the recent development.
One possible explanation for this unusual distribution is
that the City, in an effort to exercise more control over new
construction, has annexed vacant land and captured much of
the recent development. During the 1950s and 1960s, de-
velopers built in the County under less stringent building
requirements. Later, residents of these areas requested that
they be annexed by the City in order to receive City
services. The City was reluctant to annex land containing
developments that were not built-to its standards. To avoid
this problem in the future, the City annexed desirable vacant
land, forcing developers to build on City property and so
adhere to City standards.
Within the City, there is a great difference between the ages
of single-family and multifamily housing. Construction of
single-family housing peaked during the 1950s, with approx-
imately 30% of the City's housing stock as of 1979 built
during that decade. Single-family construction has been
declining since. In contrast, more multifamily housing was
built during the 1970s than existed at the time of the 1970
Census. Over 60 percent of the multifamily housing stock as
of 1979 was built during the 1970s.
Exhibit II-4 shows that both the City and the metropolitan
area seem to be experiencing a decline in housing vacancy
rates. While consistent and reliable data are difficult to
obtain, the trend has been toward lower vacancy rates. The
vacancy rate for single-family housing in Metropolitan
Bakersfield has remained at approximately I% since 1978, but
the rate for multifamily units has declined sharply from
approximately 2.5% to less than one percent in 1981.
Builders and real estate brokers in the area agreed that
-11-
Exhibit II-4
VACANCY BY TYPE OF STRUCTURE
METROPOLITAN BAKERSFIELD
1974 - 1981
City of Bakersfield Metropolitan Bakersfield**
Single- Multi- Mobile Single-. Multi- Mobile
Family famil~ & Other Family family & Other
1974
Total Units 20,312 8,589 730
Vacant Units 891 846 55 NA
% Vacant 4.39 9.85 7.53
1977'
Total Units 21,480 11,493 770
Vacant Units 779 723 20 NA
% Vacant 3.63 6.29 2.60
1978
Total Units 64,287 12,546 3,536
Vacant Units NA 639 312 12
% Vacant 0.99 2.49 0.34
1980
Total Units 66,19'4 18,486 4,252
Vacant Units NA 681 483 76
% Vacant 1.03 2.61 1.79
1981
Total Units 67,194 18,377 4,923
Vacant Units NA 771 124 29
% Vacant 1.15 0.67 0.59
* Figures for 1977 are estimates based on the 1977 Special Census.
Bakersfield did not participate in the Census.
** Figures for Metropolitan Bakersfield are for the aggregation of
Zip Code zones 93301 and 93304-93309. See map, Exhibit II-5.
SOURCES: Metropolitan Bakersfield, General Plan, Housing Element,
1980; State Department of Finance, Special Census, 1974;
Federal Home Loan Bank of San Francisco, Bakersfield
SMSA Housing Vacancy Survey, June 1978, June 1980, and
June 1981; Questor Associates.
Exhibit 11-5 BAK ERSF. IEI Di~AREA- ZIp
~.' ,,~. TO SHAFTER CITY LINE
: X '4.. '~, I
COMPANY
~.. MAP OF
WEST
BAKERSFIELD
',. ,~ ir-J
vacancy rates are low, with a general consensus of 1 to 1.5%
for owner-occupied units and 2 to 2.5% for rental housing in
February 1982. The California Housing and Community De-
velopment Department considers a two percent vacancy rate for
owner-occupied housing and six percent for rental units to be
optimal. By these standards there is currently a 'housing
shortage in Bakersfield.
Between 1970 and 1980, the number of persons per household
declined from 3.01 to 2.49 in the City, and from 3.12 to 2.70
in Metropolitan Bakersfield; therefore, the number of house-
holds has increased faster than the population. In the City,
the population increased 52%, while the number of households
increased approximately 84%. Although there was a 74~ ex-
pansion in the City's housing stock, it did not keep pace
with the growth in the number of households. Similarly, in
Metropolitan Bakersfield, there was a 24% growth in the
population between 1970 and 1980, but combined with the
decline in the number of persons per household, this resulted
in a 75% increase in the number of households. The housing
stock of the metropolitan area increased only 38% during the
same decade.
III. HOUSING PRODUCTION TRENDS
Exhibit III-1 shows building permit activity for the City of
Bakersfield since 1970. While not all authorized units are
actually constructed, the permits indicate intentions to
build, and may be a good measure of developers' perceptions
regarding the demand for housing and the availability of
construction financing.
Building permit activity for the City of Bakersfield peaked
in 1976 at a total of 2,928 units. There were significantly
more units authorized from 1976 through 1979 than before or
-14-
Exhibit III-1
BUILDiNG PEPS_IT ACTIVITY
BY HOUSING TYPE
CITY OF BAKERSFIEIf)
1970 - JANU3~RY 1982
Units Authorized by Building Permits
Single-Family Mu!tifamily Units Lost
Year Number Percent Number Percent Total Through Demolition*
1970 301 27.4 798 72.6 1,099 NA
1971 267 30.5 609 69.5 876 NA
1972 347 19.5 1,430 80.5 1,777 NA
1973 280 33.2 564 66.8 844 NA
1974 434 43.2 571 56.8 1,005 21
1975 559 37.7 925 62.3 1,484 65
1976 1,079 36.9 1,849 63.1 2,928 62
1977 1,343 50.2 1,334 49.8 2,677 NA
1978 1,505 51.9 1,393 48.1 2,898 NA
1979 1,536 68.3 714 31.7 2,250 58
1980 849 66.5 428 33.5 ]_,277 38
1981 677 48.4 721 51.6 1,398 34
Jan. 1982 96 38.9 151 61.1 247 0
Average** 765 45 944.7 55.2 1,709.4 46.3
* Also includes units lost byconversion to con~rcial property andunits
gained through annexation.
**Average excludes figures for January 1982.
NOTE: NA= not available
SOURCES: City of Bakersfield BuildingDepartment, Monthly Reports;
Kern County Planning Department, Population and Housing Report., 1978;
Questor Associates.
since then. The average for these four years was 2,688
compared with an average of 1,181 for the six previous years
and 1,338 for the following two years.
Both single-family and multifamily permits peaked at about
the same time, with an average during the late 1970's ap-
proximately double the average for all other years.
The proporation of building permits for multifamily units in
January 1982 was 61.1%. This proportion has nearly doubled
since 1979. In 1970, permits for multifamily units accounted
for 72.6% of all residential building permits, and declined
to a low of 31.7% in 1979.
IV. TRENDS IN HOMEOWNERSHIP
The percentage of owner-occupied housing units in the City
has remained relatively constant at approximately 60~ between
1970 and 1979, as shown in Exhibit IV-1. Although no data on
homeowners' exemptions are collected at the City level,
according to the Kern County Assessor's office, the ratio of
homeowners' exemptions claimed to the number of single-family
homes in Kern County has not changed since 1977. Given that
the City represents more than one-fourth of the County's
housing units, however, it is unlikely that any significant
change in tenure could have occurred in the City without
affecting the County homeownership rates.
V. RENT LEVELS
As an indication of current rent levels in Bakersfield,
Questor has examined the HUD fair market rents and conducted
a survey of recently advertised rental units. While both of
these are valuable, neither should be considered an accurate
-16-
Exhibit IV-1
HOUSING UNITS BY TENURE
· CITY OF BAKERSFIELD*
1970- 1979
Own Rent Total
Year Number Percent Number Percent Number Percent
1970 14,238 61.71 8,835 38.29 23,073 100.0
1974 15,982 59.29 10,974 40.71 26,956 .100.0
1977 19,002 58.97 13,219 41.03 32,221 100.0
1979 21,614 59.51 14,704 40.49 36,318 100.0
* Incorporated area only. Figures unavailable for un-
incorporated area.
SOURCES: U.S. Census 1970; State Department of Finance
Special Census, 1974; Metropolitan Bakersfield,
General Plan, Housing Element, 1980; Questor
Associates.
measure of the actual rent levels throughout the market. The
HUD fair market rents are used in the administration of
government housing projects, and as such are subject to
varying methodologies over time. Advertised rental units are
a selective sample in that they provide information on rent
levels for new tenants, which are often higher than the rates
paid by those who have been renting the same apartments for a
number of years. Additionally, advertised rentals do not
include rental units that are so desirable, either because of
better quality or lower rents, that the landlords need not
advertise.
According to the Department of Housing and Urban Development
the fair market rents for Bakersfield as of March 18, 1981
are as follows:
Studio $195
1 Bedroom 252
2 Bedroom 288
3 Bedroom 391
4 Bedroom 462
These rates have been adjusted to exclude utilities by sub-
tracting the 1981 average monthly ?G&E bill in Bakersfield,
of $23.
The results of Questor's rental survey of advertised housing
in the Bakersfield area appear in Exhibit V-1. Units cur-
rently on the market may not be a random sampling, and
therefore not an indication of the entire market. For units
sampled, however, the actual median rent levels of smaller
units (studios, one-bedroom and two-bedroom apartments) were
well below the HUD fair market rents. For units of three or
more bedrooms, the median rents determined by the survey were
significantly above the HUD fair market rents. It appears
there is a relatively higher demand for larger rental units.
One possible explanation for this is that families who are
eliminated from the home-buying market by high interest rates
-18-
' Exhibit V-1
RENT SURVEY OF ADVERTISED HOUSING UNITS
PERCENTS BY TYPE OF UNIT
BAKERSFIELD, 1982
Multifamily Units Single-family Units
1 2 3 or More 1 2 3 4 or More
Monthly Rent Studio Bedroom Bedrooms Bedrooms Bedroom Bedrooms Bedrooms Bedrooms
Under $150 8 2 7
$151 - 200 70 17 1 32 3 201 - 250 19 51 14 43 14
251 - 300 3 26 39 4 17 24 3 2
301 - 350 3 30 21 1 24 6
351 - 400 10 18 17 12 6
401 - 450 2 7 6 14 3
451 - 500 2 16 5 23 14
501 - 550 2 11 2 17 23
551 - 600 1 5 2 10 2
601 - 650 3 5 20
651 - 700 1 2 6
701 - 750 2 11
Over $751 5 13
TOTAL 100 99 101 102 100 101 99 100
25th Percentile $162 $206 $258 $350 $172 $267 $420 $500
50th Percentile 180 230 294 450 237 319 483 600
75th Percentile 198 260 335 541 242 379 550 692
Number of Ads 37 179 237 56 75 155 281 64
in Survey
NOTES: (1) Based on advertisements for rental housing in the Sunday edition of the Bakersfield
Californian for the following dates: January 3, 10, 24, 31, February 7, 14, and 21,
1982; and the current listings (as of February 24, 1982) of the Cal State Bakersfield
Housing Office. Units were assumed to be in Bakersfield unless clearly marked otherwise.
(2) Percents may not add to 100.0 due to rounding.
SOURCE: Questor Associates.
are entering the rental market as a second-best alternative
and bidding up the price of the larger rental units. This
explanation is substantiated by interviews with major
developers in the area who indicated that they are now
building an increasing number of three-bedroom luxury
apartments to satisfy this perceived demand.
VI. HOUSING AFFORDABILITY ANALYSIS
This section addresses the issue of housing affordability.
The income levels of Bakersfield residents will influence
their choice of rental units, and their options of owning
versus renting. A distribution of households in metropolitan
Bakersfield among income-groups appears in Exhibit VI-1. The
median household income in 1980 was $22,210.
Exhibit VI-3 is an analysis of rental housing affordability.
According to this analysis, and using the income distribution
in Exhibit VI-l, 82% of the households in the metropolitan
area could afford the median one-bedroom apartment. Ap-
proximately 77% could afford the median two-bedroom apart-
ment, and only 65% could afford the median three-bedroom
apartment. Since rent levels are stated in terms of 1982
dollars, while the income distribution is for 1981 house-
holds, these percentages are slightly conservative.
In order to determine the trade-offs facing the prospective
consumer of residential housing, Questor has analyzed resi-
dential sales in the Bakersfield area for 1980 and 1981. The
results are presented in Exhibit VI-~. A map of the bound-
aries used by the Board of Realtors appears in Exhibit VI-5.
Sales in the Southwest section of Bakersfield represented 40%
of the sales in the area. The Northeast section represented
another 25%. The remaining 35% of the market was distributed
fairly well among the other sections.
-20-
Exhibit VI-1
HOUSEHOLD INCOME DISTRIBUTION
BAKERSFIELD*
1969 1980
Count % ~ Count %
Less Than $ 7,500 25,003 46.7 11,536 15.1
$ 7,500 - $14,999 19,387 36.2 13,755 18.0
$15,000 - $24,999 7,544 14.1 17,181 22.4
$25,000 - $34,999 894 1.7 16,095 21.0
$35,000 - $49,999 483 0.9 11,981 15.6
$50,000 and Over 246 0.5 6,043 7.9
TOTAL 53,557 100.1 76,590 100.0
Average Household
Income $9,117 $23,785
Median Household
Income $8,567 .$22,210
* The aggregation of Census Tracts 1.02, 2-3, 6-9.07, 11.01-31.03.
See map, Exhibit VI-2.
NOTE: (1) Totals may not add to 100.0 due to rounding.
(2) Distribution is for 1970 households, based on 1969 in-
comes; similarly, 1981 household distribution, based
on 1980 incomes.
SOURCES: National Planning Data Corporation;
Questor Associates.
Exhibit: BAKERSFIELD AREA CENSUS TRACTS
IT ·
~ METROPOLITAN
........... ~~ ~~~ ~ ~,~'~=' q/ BAKERSFIELD
I. -' -'~ ....... L ..... ~/ .... F , ~ ~ ~~ ~ '~ ~ ' ; .... : --
... , . 1 ~ .... ~~] ..... ~ .... :, .. ~ ~..
I ~;~'~ ~ i~ .~' i '~ ....... '"' -~ - '-.~ .... ' ..... ~ ......... ,~' ~ .~, .
'1~~ ~ J ' , ...... ',~.~ Ir- ~ ' , II ..... i,~ ~ ~!
,~~' ' ..... ~ /r' ~ I I . . ~ ~. _~,~ d · .~ =...~.,, .
....... , -,,, .......
Exhibit VI-3
HOUSING AFFORDABILITY ANALYSIS
MULTIFAMILY RENTAL HOUSING
BAKERSFIELD
1 BR 2 BR 3 BR
Unit Unit Unit
Monthly Rent* $230 $294 $450
Monthly Utilities** 30 35 35
Monthly Housing Expenses $260 $329 $485
Annual Housing Expenses $3,120 $3,948 $5,820
Required Annual Income*** $9,400 $11,800 $17,500
Percent of Total House- 82.4 77.2 64.9
holds Earning Required
Income or Above
* Based on 50th percentile rent level as determined
by survey, see Exhibit V-1.
** Gas and electricity expenses, based on information
supplied by Pacific Gas & Electric Company.
*** Assuming annual housing costs not to exceed 33.3%
of annual income, rounded to the nearest $100.
NOTE: Rent levels are in 1982 dollars, while the
available income distribution (see Exhibit
VI-l) is for 1981 households. As a result,
the percent of households earning required
income is a conservative figure.
SOURCE: Questor Associates.
Exhibit VI-4
RESIDENTIAL SALES
BAKERSFIELD AREA*
1980 ARiD 1981
March 1.- November 30, 1980 March .1 -iNo~ember 30, 1981
Number Percent Median Number Percent Median
Area* of Sales of Market Sale Price of Sales of Market Sale Price
1 - Central 125 6.17 $53,950 106 6.51 $59,475
2 - North 158 7.80 52,346 94 5.77 54,750
3 - Northeast 521 25.72 57,950 427 26.23 64,500
4 - Southeast 128 6.32 43,000 89 5.47 45,475
5 - Southwest 814 40.18 65,050 675 41.46 73,950
6 - Northwest 127 6.27 75,950 140 8.60 89,625
99 - Outside 153 7.55 44,000 ~97 5.96 49,500
TOTAL 2,026 100.01 $59,000 1,628 99.99 $66,237
* For Area, see map, Exhibit
NOTE: Totals may not add to 100.00. due' to rounding.
SOURCES: Bakersfield Board of Realtors, Profile Sales Activity;
Questor Associates.
Exhibit VI-5 BAKERSFIELD AREA BOUNDARIES USED BY THE BOARD OF REALTORS
.... North to
AREA 2 NORTH
'i "' OILDALE
,?;%;.,._
COMPANY
~' BAKERSFIELD
to , : !=:~.:~,: East
-.,, Enos-L~ane ..... , '--.
'. ':~;~.,~AREA_ 6 NORTHWEST' [e~tended
,r.~:~-~=~ ...... ~'""' .' 3 NORTHEAST
~... ~'~
' AREA 4 SOUTHEAST~: "~
AREA 5 SOUTHWEST
EnosLa,e L .... { · ~: I,
~ L : . EaS~
i ....... :.,.: .... ~ "~ ~ ' '~
.............. -~- . AREA 99 ' ~ ,,
;~r:.: SOURCE FIELD BOARD OF REALTOR I[
The geographical distribution of sales has remained fairly
constant between 1980 and 1981. The large percentages in the
Southwest and Northeast are due to new construction. There
is little new construction in other areas.
The median sales prices of homes in the various sections,, as
defined by the Bakersfield Board of Realtors, ranged from
$45,475 in the Southeast to $89,625 in the Northwest in 1981.
The overall median sales price for the area was $66,237, an
11% increase over the median for 1980.
Condominium sales constituted 6.67% of all residential sales
in December 1981 and 6.57% in January 1982. The average list
price for condominiums during this period was approximately
$85,000.
Affordability of owner-occuPied housing in Bakersfield is
analyzed in Exhibit VI-6. In 1981, only 26.6% of households
in the Bakersfield area could afford to purchase the median
priced home at an interest rate of 18%. With an effective
interest rate of 14%, 34.0% of the households could afford to
purchase the median priced home. A comparison of Ex-
hibits VI-3 and VI-6 shows that a higher percentage of
Bakersfield residents can afford to rent a median priced unit
than can afford to purchase the median priced home.
VII. CONSUMER HOUSING ECONOMICS
The 1981 costs of owning and renting a home in Bakersfield
are compared in Exhibit VII-1. With interest rates of 18%,
the median income household would be left with an after-tax
income, minus housing costs, of $12,318. An interest rate of
14%, which might be the effective rate on an assumed mortgage
in conjunction with a second loan, would leave the household
with $14,137. Based on first year cash flows, the median
-26-
Exhibit VI-6
HOUSING AFFORDABILITY ANALYSIS
OWNER-OCCUPIED HOUSING
BAKERSFIELD, 1981
Purchase Price: $66,237
18% Mortgage 14% Mortgage
Interest Rate Interest Rate
Annual Housing Payments* $10,778 $ 8,477
Utilities** 285 285
Property Tax (1.00%) 662 662
Private Mortgage 298 298
Insurance (0.50%)
Hazard Insurance 270 270
($100 deductible)
Annual Housing Expense $12,293 $ 9,992
Required Annual $36,879 $29,976
Income***
Percentage of Total 26.6% 34.0%
Households Earning
Required Income
or Above+
* Principal and interest of 30 year amortization,
assuming 90% loan to value ratio.
** Gas and electricity expenses based on average
bills for Bakersfield area in 1981. Information
supplied by Pacific Gas and Electric Company.
*** Assuming annual housing costs not to exceed
33.3% of annual income, rounded to the nearest
$100.
+ 1981 incomes adjusted 10% over 1980 incomes.
Assumes same distribution as for 1980 income.
See Exhibit VI-1.
NOTE: Purchase price based on median sales price of
residential units.
SOURCE: Questor Associates.
Exhibit VII-1
AFTER TAX HOUSING AFFORDABILITY 32qALYSIS
OWNER OCCUPIED AND RENTAL HOUSING
BAKERSFIELD, 1981
Owner-occupied Unit
(Purchase price: $66,237)
Mortgage Mortgage
Interest Rate Interest Rate Rental Unit
18% 14% (Rent: $450/mo.)
Line 1: Annual $24,431 $24,431 $24,431
Income
Line 2: Annual 10,778 8,477 5,400
Housing Payment
Line 3: Utilities 285 285 265
Line 4: Federal 983 1,396 3,360
Income Tax
Line 5: State In- 67 136 369 come Tax
After-Tax Income, $12,318 $14,137 $15,037
Minus housing
costs
Line 1: Estimated 1981 median income for Metropolitan Bakersfield,
based on data from National Planning Data Corporation.
Line'2: Owner-occupied: Principal and interest on 30 year amorti-
zation., assuming 90% loan to value ratio. Purchase price
based on median sales price of residential units, 1981.
Rental unit: Based on 50th percentile rental rate for
3-bedroom multifamily unit.
Line 3: Gas and electricity expenses, based on average utility
bills for Bakersfield area in 1981. Information supplied
by Pacific Gas and Electric Company.
Line 4: Based on 1981 household with married wage earner claiming
4 exemptions. Homeowner deducts 1) mortgage interest
($10,726 @ 18%, $8,337 @ 14% for the first year), and
2) property tax from gross income.
Line 5: Same deductions and assumptions as for Federal Income
Tax. Includes renter tax rebate of $137.
SOURCE: Questor Associates.
income household would prefer renting a home, which results
in an after -tax income, minus housing costs, of $15,037.
Although there are other considerations in the choice of
buying versus renting, such as equity build-up, appreciation
of the investment, and intangibles such as privacy, there is
at least some short-term economic motivation to rent.
VIII. FUTURE RENTAL HOUSING PRODUCTION
Comparatively few new housing units are being built in the
Bakersfield area. According to the Federal Home Loan Bank of
San Francisco, there were 172 multifamily units and
185 single-family units under construction in Metropolitan
Bakersfield during June 1981 (see map, Exhibit II-5, for the
FHLB's definition of the metropolitan area). This .compares
with 116 multifamily units and 1,036 single-family units in
June 1980. In June 1978, there were 852 multifamily units
and 753 single-family units under construction. Interviews
with developers revealed that this decline in residential
construction has continued into 1982.
The availability of reasonable financing seems to be the
major constraint on future development at this time. Land is
readily available; according to the Housing Element,
17,981 acres were zoned for residential use in September
1979, yet only 4,570 acres were developed. Tenneco Corpo-
ration, an oil company with a real estate subsidiary, owns
most of the available land in the Southwest section of the
City. Tenneco installs site improvements before selling the
land to developers. Developers in the area find this ar-
rangement favorable for building because of Tenneco's pro-
fessional and attractive site development and the rate at
which Tenneco makes the land available for construction. The
-29-
only constraint which Questor identified is Tenneco's stip-
ulation that no units constructed on this land be converted
to condominiums for three years. This limitation was con-
firmed by Tenneco Realty. For internal policy reasons,
Tenneco sells land intended for rentals at a lower price than
that intended for owner-occupied housing. Without the
stipulation regarding condominium conversion, it would be
possible for the developer to purchase the land at a lower
price, later converting the apartments to condominiums and
making a larger profit.
City and County services are expected to have sufficient
capacity through 1985, according to the Housing Element. The
only possible exception is domestic water supply, which has
had quality problems that might become more severe with the
stress of an increased housing supply.
IX. FUTURE RENTAL HOUSING DEMAND
Population trends for the City of Bakersfield, the unin-
corporated area, the metropolitan area, and Kern County
appear in Exhibit IX-1. The Bakersfield Planning Department
has projected the City's population using a growth rate of
approximately three percent. The annual growth rate for the
City has increased since the early 1970s, and the Kern County.
Planning Department has revised its own estimates to
recognize the higher growth rate for the City than for the
whole County. The population for the City of Bakersfield,
which was 105,611 fOr the 1980 Census, is expected to be
122,780 in 1985.
The Bakersfield Planning Department estimates that the
unincorporated area will grow much more slowly, at a rate of
1.05~, reaching 128,746 in 1985. During the early 1970s, the
population of the unincorporated area is thought to have
-30-
Exhibit IX-1
POPULATION TRENDS
BAKERSFIELD AND KERN COUNTY
City of Unincorporated Metropolitan
Bakersfield Bakersfield Bakersfield Kern County
% Annual % Annual % Annual % Annual
Year Number Increase Number, Increase Number* Increase Number* Increase
1970 69,515 -- 113,816 -- 183,331 -- 330,234 --
1974 76,282 2.35 NA -- NA -- 340,000 0.73
1977 84,189 3.34 115,194 0.17 199,383 1.21 359,900 1.91
1980 105,611 7.85** 122,195 1.99,* 227,806 4.54** 403,089 3.85
1981 108,832 3.05 124,650 2.01 233,500 2.49 411,200 2.01
1982 112,152 3.05 127,150 2.01 .239~300 2.49 419,450 2.01
1983 115,572 3.05 129,700 2.01 245,300 2.49 427,900 2.01
1984 119,097 3.05 ~132,300 2.01 251,400 2.49 436,500 2.01
1985 122,780 3.05 135,000 2.01 257,800 2.49 445,250 2.01
1990 142,464 3.02 149,100 2.01 .291,~550 2.49 491,800 2.01
1995 165,304 3.02 164,700 2.01 330,000~. 2.51 543,250 2.01
2000 191,806 3.02 ~!,900 2.01 373,700 2.52 600,000 2.01
* Projections rounded to nearest 50.
** Bakersfield did not participate in th~ 1977 Special Census. These annual percentage
increases may be high due to possible underestimation of the 1977 population figures.
SOURCES: U.S. Census, 1970 and 1980; State Department of Finance Special Census, 1974;
Metropolitan Bakersfield, General Plan, Housing Element, 1980; City of
Bakersfield Planning Department; Kern County Planning Department; Questor
Associates.
actually declined due to annexation and had an average annual
growth rate for the decade of only 0.17%. Population pro-
jections for the incorporated are are based on the City
limits as of the 1980 Census, and assume no annexation;
therefore, the growth rate should not be estimated on the
basis of a period when the population of the unincorporated
area was declining due to annexation. For this reason,
Questor has estimated a higher rate of growth for the
unincorporated area than that used by the City Planning
Department. Questor expects the unincorporated area to grow
at the same rate as the County, 2.01%, reaching a population
of 135,000 by 1985, a difference of about 6,000 people over
the County estimates.
Questor's higher estimated growth rate for the metropolitan
area as a whole reflects the higher growth rate in the
unincorporated area. Questor estimates that the metropolitan
population will reach 257,800, an annual increase of 2.49%.
This Compares with the County's estimates of 251,640, or
2.01% annual growth rate. County planners have assumed that
the metropolitan area is growing at the same rate as the
County when figuring population projections. In conversation
with Questor, however, they acknowledged that the population
in the western part of the County'is being limited by com-
panies who are holding the land for oil exploration, and this
will most likely shift population trends toward the Bakers-
field area.
Using these population projections, Questor has forecasted
the demand for rental housing in Bakersfield to the year 1985
and calculations appear in Exhibit IX-2. The estimated
average yearly housing demand is for 1,426 additional units
in the City, and 2,313 additional units in the metropolitan
area. Rental housing demand is assumed to be 40.49% of the
yearly average. This means an average yearly demand for
577 rental units in the City, and 938 rental units for the
-32-
Exhibit IX-2
RENTAL HOUSING DEMAND PROJECTION
BAKERSFIELD 1980-1985
City of Metropolitan
Bakersfield Bakersfield
Average Annual
Household Growth 1,379 2,222
Replacement Housing
Need 47 94
Average Incremental
Housing Demand 1,426 2,316
Average Incremental
Rental Housing Demand 577 938
Vacancy Allowance 116 220
Average Yearly Rental
Housing Demand 693 1,158
NOTES: (1) Average Annual Household Growth based on population
projections in Exhibit IX-l, and using population
per household estimates, based on 1980 Census Data,
of 2.49 for the City and 2.70 for the metropolitan
area.
(2) Replacement Housing Need based on a historical demo-
lition rate in the City of 0.1].% for years when
data was available, multiplied by the number of
units in' the 1980 housing stock; the result is a
slight underestimate of future demolitions.
(3) Average Incremental Rental Housing Demand based on
40.49% rental rate for the City in 1979.
(4) Vacancy allowance includes (a) a 5% vacancy rate in
the incremental housing demand, and (b) a 2.5%
increase in the present rental housing' stock, which
would be needed to bring the current vacancy rate
to 5% by 1985.
combined metropolitan area. Additionally, 116 units in the
City and 220 units in the metropolitan area will be needed to
allow for a 5% vacancy rate among rental housing units.
Questor's method for determining these projections is ex-
plained briefly below:
° Average annual household growth is calculated
using the population projections in Ex-
hibit IX-l, and population per household
estimates based on 1980 Census data of 2.49
for the City and 2.70 for the metropolitan
area.
Replacement housing need is determined by
multiplying the number of units in the 1980
housing stock by the City's historical
demolition rate of 0.11%. This results in a
slight underestimate of future demolitions
because the demolition rate should be applied
to future rather than current housing units.
The aVerage incremental housing demand (the
total of above) is multiplied by 40.49%, the
percentage of rental housing units in 1979 to
determine ~the average incremental rental
housing demand. This assumes that the dis-
tribution between rental and owner-occupied
units will not change significantly by 1985.
Since the proportion of rental housing in-
creased only 2% between 1970 and 1979, this is
a reasonable assumption.
A vacancy allowance is added to the above to
allow for a 5% vacancy rate in the rental
housing stock. This includes not only a 5%
-34-
addition to the incremental housing demand,
but also additional units to alleviate the
current vacancy shortage, as discussed in
Section II above. To determine this number,
the total number of housing units in 1980 is
multiplied by the proportion of rental units
(40.49%). This figure is multiplied by 2.5%
which represents the difference between cur-
rent and acceptable vacancy rates. The re-
sulting number is then distributed among
5 years to arrive at the average number of
units to be added per year in order to eli-
minate the vacancy shortgage by 1985.
X. CONCLUSIONS
Questor has concluded that there is a substantial need for
rental housing in Bakersfield. This need stems from two
sources: (1) a currently low vacancy rate, and (2) expected
population increases. Questor projects that there will be an
incremental need for 693 rental units annually through 1985
in the incorporated City, and 1,158 units annually in the
combined metropolitan area.
In the Housing Element (1980), the Bakersfield Planning
Department calculates its own housing demand projections to
the year 1985. They project an incremental demand for
1,603 units annually for the City and 2,559 units in the
metropolitan area. The two most significant ways in which
these projections differ from Questor's are: (1) they are
based on lower population projections, and (2) they include
owner-occupied as well as rental units whereas Questor has
been concerned solely with rental units. For the sake of
comparison, Questor has projected the following annual in-
cremental housing needs, which include owner-occupied units,
but are based on Questor's higher population projections:
-35-
City of Bakersfield: 1,711 units
Metropolitan Bakersfield: 2,859 units.
Questor's distribution of additional housing demand is based
on the City's maintaining its present proportion of .the
housing stock. Since there appears to be one continuous
housing market, ~owever, the City could capture all new
development and supply the needs for the entire metropolitan
area. The 693 units projected for the City's annual
incremental housing needs (see Exhibit IX-2) can be
considered a minimum which the City can capture, with a
maximum of 1,157 additional units. This larger figure would
shift new households toward the incorporated area. Policy
decisions will infuence distribution of units between the
City and the County.
-36-
PROFESSIONAL SERVICES FOR ;.
CITY_0F BAKERSFIELD
A PROPOSAL BY
PROFESSIONAL SERVICES FOR
CITY OF BAKERSFIELD
A PROPOSAL BY
BAILEY, RUPPEL & NUNNELEY
Certified Public Accountants
BAILEY, RUPPEL & NUNNELEY
CERTIFIED PUBLIC ACCOUNTANTS
CECIL J. BAILEY, CPA 1321 STINE ROAD
CATHY W. RUPPEL, CPA BUILDING A
BAKERSFIELD, CALIFORNIA 93309
LANA M. NUNNELEY. CPA (805) 834-4747
April 22, 1982
Budget Review and Finance Committee
City of Bakersfield
1501 Truxtun Avenue
Bakersfield, California 93301
Attention: W. D. Higginbotham, Jr.
Gentlemen:
We are pleased to submit our response to the request for proposal
for appointment as independent auditors of the City of Bakersfield for
the fiscal year ending June 30, 1982.
.The attached proposal describes our ability to perform services
for the City, our approach to the audit, and an estimate of the fee for
these services.
We hope the accompanying information will be valuable to you as
an aid in making an evaluation of our services as they would relate to
the City. If you have any questions, would like further information or
would like us to appear before the City Council, please do not hesitate
to contact us,
We look forward to serving you.
Very truly yours,
'BAILEY, RUPPEL & NUNNELEY
Lan a 'Nunn el ey ~
CONTENTS
I. Our Approach to the Audit
II. Personnel Resources
III. Estimated Fees
I. OUR APPROACH TO THE AUDIT
I. OUR APPROACH TO THE AUDIT
Our.examination of the financial statements of the City of Bakersfield
will be made in accordance with generally accepted auditing standards, and
will include tests of accounting records and transactions as well as other
auditing procedures we consider necessary. Our auditing procedures will
conform to:
Audits of State and Local Governmental Units prepared by
the American Institute of Certified Public Accountants'
Committee on Governmental Accounting and Auditing, 1974;
and,
Statement 1, Governmental Accounting and Financial Reporting
Principles prepared by the National Council on Governmental
Accounting, 1979; .and,
Statement 2, Grant, .Entitlement, and Shared Revenue Accounting
and Reporting by State and Local Governments prepared by the
National Council on Governmental Accounting, 1979; and,
.Governmental Accounting, Auditing, and Financial Reporting
prepared by the Municipal Finance Officers Association, 1980.
Our audit procedures focus upon testing internal controls and operating
systems as well as examining account balances. Based on this premise, the
conduct of the audit will include the following major tasks:
Estimated
Timing *
TASK 1 - Pre-audit review and planning. May/June 1982
TASK 2 - Evaluate internal controls. June 1982
TASK 3 - Conduct tests of operating systems. June 1982
TASK 4 - Examine account balances as of
'June 30, 1982. August/Sept. 1982
TASK 5 - Prepare audit report. September 1982
* To be scheduled with City personnel.
Each task is briefly described as follows:
TASK 1 - Pre-Audit Review and Planning
Due'to the change in computer systems, the accounting reports and
subsidiary information are in a different format from the.prior year.' We
also understand that under the PRIME system, special purpose reports for
the audit can be generated. In order to assure that information required
is available and can'be produced on a timely basis, we'propose to begin
the planning phase'of the audit in May, 1982. At this time, we will meet
with City staff to determine if any special reports are required and
prepare a time schedule for these reports to be available to the auditors.
At this time, we would also review the accounting records for the
year to insure that the audit trail is intact. We are not expecting any
problems in this area. However, due to the system conversion, we feel the
prudent approach to this year's audit includes an early assessment of the
audit trail as it has existed during the year.
TASK 2 - Evaluate Internal Controls
Our evaluation of internal controls will include administrative
controls that primarily relate to operational efficiency and adherence to
City policy. In many cases these controls will only indirectly bear on
the reliability of the City's financial reports.. However, we consider
these procedures to be important to enhance the credibility of the financial
reports.
Our procedures in this task include:
Reviewing City policies and procedures.
Preparing or revising flowcharts of each operating system
to reflect recent changes in the flow of transactions.
Performing tests to determine that each system is functioning
as designed.
Analyzing documentation related to electronic data processing
(EDP) applications, with emphasis on controls over input and
output.
Reviewing the budgeting process so that we will draw the
proper correlation between actual financial results and
budgeted amounts.
'TASK 3 - Conduct Tests of Operating Systems
During this phase of the audit we test selected transactions that
have occurred ·throughout the fiscal year. Our objective is to determine
if each operating system is functioning as designed, and if it is accumulating
or producing reliable financial data. Included in this task are the following
possible approaches:
~ ' Test data accumulation and computer internal controls
for those accounting applications on the computer at
June 30, 1982.
Test transactions selected by reference to applicable
supporting documents and budget guidelines.
Regular cash disbursements.
Recurring cash receipts'.
Payroll disbursements. '
Standard and non-standard journal entries.
Examine significant transactions including:
Major expenditures such as those related to
.capital improvements.
Significant lease or purchase commitments.'
Federal and State grant programs.
TASK 4 - Examine Account Balances as of June 30, 1982
Once the City's books are closed for the fiscal year, we will begin
the last phase of field work of the audit. The extent of audit procedures
used during the verification of account balances is largely dependent upon
the results obtained'during TASK 3. Assuming the system of internal controls
is well ~esigned and is functioning properly, we will be using a. relatively
limited number of procedures during this task. We will develop and apply
detailed audit programs which include, for example, the following:
Confirming cash balances.
Confirming with third parties Significant amounts
owed or due the City.
Conducting other audit procedures as required to
satisfy ourselves as to the amounts included in
the financial statements, including analysis of
account balances.
TASK 5 - Prepare Audit Report
Once the City staff have drafted the financial statements and
required footnote disclosure, we will review the dr~aft to.insure the
statements are presented in accordance with generally accepted accounting
principles and issue our opinion. The major part of this task is the
reconciliation of the financial statement balances to the general ledger
balances.
II. PERSONNEL RESOURCES
II. PERSONNEL RESOURCES
We believe the individuals that provide our services, and their
qualifications, are the most important assets we can present.
The team we will 'assign is illustrated in the following summary.
The team has the multi-skill experience required for the engagement. An
abstract of the qualifications of each team member is given below:
Team Member · Qualifications
Partner-in-Charge Lana Nunneley . . previous audit experience
and training with Authur Young & Co. . audit
experience with governmental agencies (a major
California city, Kern County Council of Govern-
ments), a transit district, not for profit
organizations and manufacturing concerns
experienced computer auditor BA in govern-
ment and history from University of Texas .
MBA from University of Santa Clara . . .
Certified Public Accountant.
Co-ordinating Auditor Cathy Ruppel nine years experience in public
accounting familiar with governmental
accounting and auditing procedures . previous
audit experience with governmental agencies, not
for profit organizations, banks, insurance and
manufacturing concerns . BBA in accounting
from University of Texas . . Certified Public
Accountant.
Senior Auditor Dale Piner four years experience in public
accounting . previous audit experience with
school districts, water districts, savings and
loans and manufacturing concerns . BA in
business administration from California State
University, Fullerton .~. Certified Public
Accountant.
The three auditors described above were part of the audit.team
assigned to the City of Bakersfield audit for the year ended June 30, 1981.
Staff auditors with one to three years experience will also be assigned to
this engagement.
III. ESTIMATED FEES
III. ESTIMATED FEES
Our services are of the greatest value when the relationship between
our client and ourselves is founded on the understanding that both parties
must be satisfied, not only with the quality of our services, but also with
our fees. Our fees are based on the compensation, experience, and qualifi-
cations of the individuals assigned to the engagement. In preparing our
estimate, we gave careful consideration to the various levels of experience
and expertise required for this engagement.
Our fees are based upon the time actually expended by our personnel on
the engagement. If, during the course of our work, we find that the engagement
can be completed in less time than the estimated hours, we will bill only the
time actually spent on the job. Services for which we will bill you, will
not exceed the fees in the fee summary, under the following circumstances:
The scope of our work remains unchanged from
that described in this proposal.
The General Ledger is closed and ready for audit
before we are required to begin Task 4.
The following fee summary shows the hourly rates and estimated hours
by classification of staff:
MAXIMUM FEES BASED ON ESTIMATED HOURS
Hourly
Rates Hours Fee
Partner $50 160 $ 8,000
Senior auditor $40 100 4,000
Staff auditors $21 - $30 480 10,000
740 $22,000
I RECEIVED -RECEIVED.
' N'~ANATT, PHELPS, ROTHENBERG & TUNNEY
I' ' J A N g 1 1987_
~ ' ATTORNEYS AT LAW
I , ~.;;!, , . ,~ 'Mary K. ShetI, Mayo~
~ ' ] ' - "' (~ TELEPHONE 12J3] 55~-15OO '~ WASHINGTON. D.C.
' 'CITY CLERK
".. January 19, 1982' .~:. ,. [o~ ..... ~,~o~.~,
Mary of K' Bakersfield Shell, Mayor
City
1501 Truxtun Avenue
Bakersfield, California 93301
Dear Mayor Shell:
As you know, your City recently selected Bache
Halsey Stuart Shields Incorporated to .serve as underwriters
for. the proposed $85 million multi-family revenue bond issue.
.This firm has a very fine relationship with Bache and we
would very much appreciate the opportunity to serve as bond
.counsel for that project. Bache is also very interested in
having us involved ~ith them.
I would apprecSa~e ~ vory much 5f ~hSs
could be referred to the appropriate 'co~nittee' of the Council
so.that ~this firm may have the oppgrtunity to make a formal
presentation~ in connection with th~ bond-issue. .... Sinc~~r~ly yours,
~ Pete elly
/ of N~a~a~t~ Phelps~
~DK: bas ~
PHELPS, F~OThENBERG & TUNNEY
ATTORNEYS AT I-AW
(213)
January 15 1982
DESCRIPTION
OF
MANATT, PHELPS, ROTHENBERG & TUNNEY
I. INTRODUCTION
Manatt, Phelps, Rothenberg & Tunney is a rapidly
groWing firm of young lawyers. The firm has thirty-nine
partners, three attorneys serving as of counsel, and fifty-
seven associates, with seventeen additional, lawyers joining
the firm in the spring and fall of 1982.. Sixteen clerks,
fr~om different law schools, will be spending the summer with
the firm this year. The firm has grown from seven attorneys
.in mid-1973, and plans' to continue its growth. In the past
year the firm opened a. San Francisco office, specializing in
municipal bonds, and'an office in downtown Los Angeles speci-
alizing primarily in international corporate and banking.
The firm also has a strong tradition of individual
participation in community activities. Over the years, law-
yers in the firm have assumed significant responsibilities
in a broad range of educational, political, civic, charitable,·
professional, and social concerns.
II. NATURE OF PRACTICE
The major areas of the firm's practice are corpor-
ate, banking, energy, securities, and tax law; corporate and
commercial litigation; entertainment and sports law; admin- ~
istrative law; municipal bonds and real estate.
,- MANATT. PHELPS, ROtNENEIERG & TUNNEy
January 15, 1982·
Page 2
In the corporate area, the firm' commonly serves as
general corporate counsel. In addition, it~ represents a
number of clients on a. specialized basis for such matters as
registration under and 'compliance with· federal and state
securities laws, including registration of equity and debt
offerings and limited partnership syndications, proxy con-
tests, and tender offers, as well as other specialized corpo-
rate representation in the areas of mergers and acquisitions,
reorganizations and dissolutions..· Among the firm's clients
in this area are approximately sixty financial institutions,
ranging from small independent banks to large international
bank holding companies and foreign bank_ agency offices. The
firm also. represents corporations outside the banking area,
including corporations engaged in the exploration for and
development and production of oil and gas, as well as several
large foreign companies, including Japanese trading companies.
In the. entertainment area, the firm represents
record companies, television and motion picture production
companies, producers, directors, writers, artists and enter-
tainers, and concert promoters. I'n addition, the firm repre-
sents teams, leagues, and professional athletes in various
sports.
The/firm's litigation department .combines. an excep--
tionally diverse practice with a solid emphasis on the devel.-'
opment of the competence of_i..ts litigators. The department's
practice extends to virtually every substantive area of. com-
mercial law, including contracts, business torts, securi-
ties, antitrust,.' and real estate. The department's p=actice
includes litigation in-several areas not always a part of a
general corporate practice: white collar criminal defense,
entertainment, and sports. New litigators are assigned a
varied caseload, work cl.osely with senior lawyers on large
cases, and take primary responsibility on smaller cases with
a senior lawyer participating in an advisory capacity. This
mix of cases promotes the department's dual. objectives of
comprehensive training and rapid assumption of responsibility-.
The firm represents clients before a variety of
administrative and regulatory-agencies, encompassing both
informal and formal agency actions. These agencies include
the Securities and Exchange Commission, the-Federal Deposit.
Insurance Corporation, the Comptroller of the-Currency, the
Internal Revenue Service, the Department· of the Interior,·
.. MANATT, PHELPS, ROThENBERg & TUNNEY
January 15, 1982
Page 3
the Franchise TaX Board, the California State Banking
Department, the California Department of Savings and L°an,
the California Coastal Commission, the California Department
'of Corporations, the California Department of Real Estate,
and the State Board .of.Equalization.
The firm's municipal bond department engages in a
broad spectrum of activities representing cities, counties,.
and special districts in California. and theWest, princi-
pally as bond counsel. Such activities include advising
..municipalities how best to finance projects.ranging from
building to water and sewer facilities, and preparing legal
documentation for the financing. The firm also engages in
litigation to assist the municipalities in enforcing their
rights under the bonds.
In the.real estate area, the ~firm has had exten-.
sire experience in financing; real estate investment trusts;
saleS; private and publ'icly offered real estate syndications;
residential and commercial developments, including nation-
wide shopping center development; subdivisions, including
condominium development and qualification; and landlord-
tenant matters. Real estate clients include large construc-.
tion and development companies, developer-owners of. commercial
and residential properties, and major_lending institutions.
III. NEW LAWYERS
The firm seeks lawyers of the highest' caliber.
Emphasis is placed on academic achievement, and other experi-
ence such as government service, clinical experience, and
relevant work experience. Since the firm encourages the
production of legal services of the highest quality and early
client contact, as well as participation in the management
of the firm, individual maturity and the ability and desire
to assume responsibility are also of. great' importance to .us..
The firm's ninety-nine attorneys attended, twenty-
eight different law schools. I~cluding the attorneys join-
ing the firm in 1982, twenty-three of the firm's attorneys
were formerly summer clerks wi.th the firm.
MANATT, PHELPS, ROThENB'ERG ~-.TUNNE¥
January 15, 1982 '
Page 4
IV. BIOGRAPHICAL INFORM3.TION
Charles T. Manatt, born Chicago, Illinois, June 9,
1936; admitted to bar, 1962, California. Preparatory educa-
tion, Iowa State University (B.S. 1958); legal education,
George Washington University (J.D. 1962) Member, Board of
Editors, G~orge Washington Law Review, 1960-62. Chairman,
California Democratic Party, 1971-73, 1975-77; Southern
Chairman, California Democratic Party, 1973~75; Chairman,.
Western States Conference Democratic Party, 1972-76; Demo-
cratic Party National. Committeeman, 1976--; Democratic Party.
Executive Committeeman, 1976--; Chairman, National Finance
Council of the Democratic National Committee~ June, 1978-80;
Chairman, Democratic National Committee, 1980--; President,
San Fernando Valley Bar Association, 1971; Member, Los ' ~
Angeles. County'Bar Association Board of Trustees, 1978;
Chairman of the Board of DirectOrs of First' Los Angeles
Bank, 1973---; Member, Board of Directors., Tiger International,
1980--; Member, Board of Directors, Gene.ral Telephone Com-
pany, 1980--; President, California Bankers Association,
1979-80. Member: Los Angeles County and American Bar
Associations;. State Bar of California.
Thomas D. Phelps', born Sigou'rney, Iowa, October 10.,
1936; admitted to bar, 1963, Iowa; 1964, California; 1979;
U'.S. Supreme Court. Preparatory education,. Iowa State
University (B.S. 1959); legal education, George. Washington
University (J.D. 1963). Member, Board of Editors, George
Washington Law Review, 196.1-62; President, American Law
Student Association, 1961-62. Director: Tokai Bank of
California; Deauville Restaurant, Inc. Foreign. law counselor
to the Tokyo firm of Nagashima &- Ohno, 1978. Member:
California Bankers Association and Western Independent
Bankers Association; Los Angeles Area Chamber of Commerce;
Town Hall; Japan American Society of Southern California;
Advisory Board of Directors, California Museum of Science
and Industry; Los Angeles County and American Bar Associa-
tions; State Bar of California. (At. Downtown L.A. Office.)
Alan I Rothenberg, born Detroit, Michigan, Apri: 10
1939; admitted to bar, 1964, California. Preparatory edu-
cation, University of Michigan (B.A. 1960); legal education,
University of Michigan (J.D. 1963). Assistant'Editor,
Michigan Law Review, 1962-63. Order of the Coif.. Member:
Board of Governors, National Basketball Association, 1975-'79;
Board of Governors, North American Soccer League., 1977-80.
Commissioner (Soccer), 1984' Olympics. Director: First Los
Angeles Bank; Bank of Newport; Newport. Financia! Ltdz; First--
MANATT, PHELPS, ROTHENBERG ~, TUNNEY
January 15, 11982
Page 5
Thrift of America; Wolf & Rissmiller Concerts. Member: Los
Angeles County, Beverly Hills, Century City (Member, Board of
Governors~ 1978--), and American Bar Associations (Chairman,
Litigation Section Committee on Entertainment, Sports and Media
Litigation; Member, Executive Committee, Sports Division, AEA
Forum Committee on the Entertainment and Sports Industries);
State Bar of California.
John V. TUnney., born New York City, June 26, 1934;
admitted te bar, 1959, Virginia; 1963, California; 1963, New
York. Preparatory education, Yale Usiversity- (A.B. 1956);
legal education, Academy of International Law, The~Hague,
Netherlands (!957), University of Virginia (J.D. 1959).
Member: The United States House of Representatives, 1965-71;
The United States Senate, 1971-77; Board of Directors,
Western Center on Law & Poverty, Inc.' Member: American
and New York State Bar Associations; Virginia State Bar;
State Bar of California'.
L. Lee Phillips, born New York, New York, August 16,
1937; admitted to bar, 1959, District of Columbia; 1960, New.
York; 1964, California. Preparatory education, Cornell
~University (A.B. 1957); legal education, CornelI University
(J.D. 1959). Order of the Coif. Note Editor, Cornell..Law
Quarterly, 1957-59. Trial Attorney, Department of Justice-,
Tax Division, 1959-63. Member: Los Angeles Copyright
Society; Los Angeles County, BeverlyHills, and American Bar'
Associations; District of Columbia Bar; New York State Bar;
State Bar of California.
Barnet Reitner, born Brooklyn, New YOrk, March 29,
1945; admitted to bar, 1971, California. Preparatory educa-
tion, University of California at Los Angeles (A.B. 1967);
legal education, University of California at Los Angeles
(J.D. 1970). Articles Editor, UCLA Law Review, 1969-70.
Director, California Korea Bank. Member, Advisory Committee
to California State Banking Department on Banking Law and
General Corporation Law. Member: Los Angeles County,
Century City, and American Bar Associations; State Bar of
California.
Willie R. Barnes, born Dallas, Texas, December 9,
1931; admitted to bar, 1960, California. Preparatory educa-
tion, University of California, Los Angeles (B.A~. 1953);.
legal education, University of California, Los Angeles (J.D.
1959). California Commissioner of Corporations, 1975-79.
First Vice President, North American Securities Administrators
'Association, 1978-79. President, Midwest Securities Commis
sioners Association, 1978-79. Alumnus of the Year,. UCLA Law
MANaTT. PHELPS, RoTH'ENeErG & TUNNEY
January 15, 1982 " ..
Page 6
School, 1976. Member: Oil~ and Gas Industry Advisory Com--
mittee and Real Estate Investment' Advisory committee, North
American Securities Administrators Association; State of
California Securities Regulatory Reform Panel; Los Angeles
County, BeVerly Hills, Century City, and American(Member,
Committee on Commodity Regulation; Committee on Federal
Regulation of Securities,. and State Regulation of Securities
Committee) Bar Associations;' State Bar-of California..
Brian J.. O'Neill, born New York, New York,
October 12, 1940; admitted to bar, 1966, California; 1968,
District of Columbia. Preparatory education, University of
Notre Dame (A.B. 1962); legal education, Fordham Law School.
(J.D. 1965). Trial attorney, National Labor Relations Board,
1966-67. Assistant United States Attorney, Central Distri.c~
of California, 1970-74; Member, U S. District Court Indigent
Defense Panel, 19.77-78,. 1980--. Member California Attor--
neys for Criminal Justice; Los Angeles County and American
Bar Associations; Bar Association of. the District of Columbia;~
State Bar of California. (At Downtown. L.A. Office.)
Michael Kantor, born Nashville, Tennessee, August 7,
1939; admitted to bar, 1968, Florida; 1972, District. of
Columbia; 1975, California. Preparatory education, Vander-
bilt University (B.A. 1961); legal education', Georgetown
University (J.D. 1968). Member, Georgetown Law Review.
State Chairman, Carter for President; 1980. Director, Legal
ServiCes Corp., 1979--. Campaign Director, Brown for~ Presi-
dent, 1976. Campaign Director, Senator Cranston. Reelection,
1974. Member: National Legal Aid and Defender Association;
American Bar Association; Florida State Bar; District of
Columbia Bar; State Bar of California.
Leslie S. Klinger, born Chicago, Illinois, May 2,
1946; admitted to bar, 1971, California. Preparatory educa-
tion, University of California, Berkeley (A.B. 1967); ~legal
education, University of California, Berkeley (Boalt Hall)
(J.D. 1971). Order of the Coif. Note and Comment Editor,
California Law Review, 1969-70.' Trustee, Urban Innovations. ~
Group. Director, Motion Picture and Television Tax Insti-
tute. Chairman, Estate and Financial Planning for the
Closely Held Corporation, Practising Law Institute, 1976-81.
Member: Los Angeles County, Beverly Hills, and American Bar
Associations; State Bar of California.
N1ANATT, PHELPS, F~OTHENBEIRG & TuNNEy I
January 15, 1982
Page 7 i
Martin M. Jelenko, born New York, New York, June 16,
1945; admitted'to bar', 1972~ New-York; 1972,.California.
Preparatory education, Columbia University (A;B. 1967); legal.
education, New'York University (J.D. 1971).. Member:
Los Angeles County. and American Bar Associations; State Bar
of California.
Joseph Horacek I'II, born Atlanta, Georgia, May '18-,
1941; admitted to bar, 1967, California. Preparatory educa-
tion, Occidental College and University of California at Los
Angeles (B.A. 1963); legal education, Univemsity of California
at Los Angeles (J.D. 1966). Member,' Board of Editors, UCLA
Law Review, 1964-65. Member: Los Angeles CoPyright. Society,
Beverly Hills and Los Angeles County Bar Ass0cia.tions; State
Bar of California.
George R. McCambridge, born Los Angeles, California,
June 5, 1945; admitted to bar, 1973; California. Prepara-
tory education, University of San Francisco (B.A. 1967); legal
education, University of~California, Los Angeles (J.D. 1973).
Chief Articles Editor, UCLA Law Review, 1972--73. Director,
UCLA School of Law Alumni Association. Vice Chairman,
Brentwood Bank. Member: Los Angeles County and American Bar
Associations; State Bar of California.
Richard D.'Wiltiams, born Los Angeles, California,
August 30, 1946; admitted 'to bar, 19.73, California._ Prepar-
atory education, Washington State University (B.A. 1969);
legal education, University of: California at Los'Angeles
(J.D. 1973). Comment Editor, UCLA Law Review~.19'72--7'3..
Member: Los Angeles County. and American Bar Associations;
State Bar of California~
Arnold P. Schuster, born New York', New York,
August 4, 1940; admitted to bar, 1965, New York; 1.970,
Maryland; 1978, California. Preparatory education, Cornell
University (A.B. 1962); legal education, Columbia University
(J.D. 1965). Member: New York State Bar; State Bar of
California.
Ronald J. Silverman, born NeW York, New York,
August 29, 1946; admitted to bar, 1973, District of Columbia;
1978, CalifOrnia. Preparatory education, Pennsylvania State
University (B.A. 1967); legal education, George Washington
University (J.D. 1972). Member, George Washington Law
Review. Assistant Chief, Special Litigation Section,'Anti-
M'ANATT', PHELPS. F~OTHENBERG ~ TUNNEY
· January 15', 1982
" Page 8
trust Division; U.S. Department of: Justice, 1977; Trial
Attorney, Special Trial Section, Antitrust Division, U.S.
Department of Justice, 1972-77. Special Assistant U.S.
Attorney, Washington, D.C., 1975. Co-Editor, Merger Case
Digest, 1980. Member: Los.Angeles County, Century City,
and'American Bar Associations; District of Columbia Bar;
State Bar of California.
George David Kieffer, born New York, NewYork,
November 17, 1947; admitted to bar, 1973-, California; District
of Columbia, 1980. Preparatory education, University of
California, Santa Barbara (B.A. 1969); legal education,
University of California, Los Angeles (J.D. 1973). Member,
UCLA Law Review, 1971-72. Extern Clerk, Chief Judge David
Bazelon, U.S. Court of Appeals, D.C. Circuit, 1972. Vice
Chairman, University of California, Santa Barbara'Foundation.
President, Alumni Association,- University of California,
Santa Barbara, 1976-77, 1978-80. Regent-Designate and Regent,
Board of Regents, University'of California, 1978-80. Vice
President, Center for the Study of Democratic Institutions..
Member: Los Angeles County and American Bar Associations;
District of Columbia Bar; St-ate Bar of California.
Gordon M. Bava, born Stockton, California, February 12,
1948; admitted to-bar, 1974, California. Preparatory' educa-
tion, Georgetown University (B.S.F.S. 1970); legal educa-
tion, University of Southern California (J.D. 1974). Phi
Beta Kappa. Executive Note Editor, Southern California Law
Review, 1973-74. Member: Japan American Soci.ety of Southern
California; Los Angeles County and American Bar Associations;
State Bar of California.. (At Downtown L..A... Office.)
Marc Epstein, born Hollywood, California, March 1,
1949; admitted to bar, I974, California. Preparatory educa-
tion, University of California at Los Angeles (B.S. 1971);
legal education, 'University of. California, Los Angeles (J.D.
1974). Order of the Coif.. Articles Editor, UCLA Law Review,
1973-74. Member: Los Angeles County.and Beverly Hills Bar
Associations;State Bar of California.
Richard Lee. August,' born Chicago, Illinois, February ii
1947'; admitted to bar, 1974, California. Preparatory educa-
tion, University of Illinois (B.S. 1969; B.A. 1969); legal
education, University of Southern California (J.D. 1974).
Phi Beta Kappa. Notes and Articles Editor, Southern Cali-
fornia Law Review, 1973-74. Member': Los Angeles County and
Beverly. Hills Bar Associations; State' Ba~'of California.
MANATT, PhElPS. R'OTHENBERg & TUNNEY
January 15, 1982
Page 9
Jack Fried, born Rome, Italy, February 3, 1949;
admitted to bar, 1974, California. Preparatory education,
Uniuersity of California at Los Angeles (A.B. 1971);·legal
education, University of California at Los Angeles (J.D.
1974). Phi Beta Kappa. Counsel, California State Banking
Department, 1974-76. Member: Los Angeles County and American
Bar Associations; State Bar of California.
Richard S. shaffran, born Hollywood, California,
November 15, 1949; admitted to bar, 1974, California.
Preparatory education, University of California, Santa Cruz
(A.B. 1971); legal education., Yale Law School (J.D. 1974).
Member: Beverly Hills and American Bar Associations; State
Bar of California.
MarkS. Greenfield, born Los Angeles, California,
April 11, 1950; admitted to bar, 1974, California. Prepara-
tory education, University of California, Los Angeles, (B.A.
1971); legal education, University of California, Berkeley
(Boalt Hall) (J.D. 1974). Law Clerk to U.S. District Judge
William T. Sweigert, Northern District of California, 1973-74.
Member, Board of Trustees, University of California, Los
Angeles Foundation, 1977--. Member: Los Angeles County and
American Bar Associations; State Bar· of California.
Thomas E. McLain, born Kansas City, Missouri,·
August 19, 1946; admitted, to bar, 1974, California. Prepara-
tory education, Duke University (A.B. 1968); legal education,
Duke 0niversity (J.D. 1974). Articles Editor, Duke· Law
Journal, 1973-74. Graduate of the Inter-University Center
for Japanese Language Studies in Tokyo, Japan; Japan Founda-
tion Fellow, 1974-75. Foreign law counselor to the Tokyo
firm of Nagashima & Ohno, 1975 and 1978-79.. Founder, The
Century of the Pacific Conferences in. Los Angeles and Tokyo.
Lecturer: University of Southern California Law Center; UCLA
Extension; Practising Law Institute; FederaI'Bar Association;
U.S. Chamber of Commerce; Keidenren. Member:. Japan.American
Society of Southern California; Japan-California Association;
American Bar Association; Federal Bar Association; State Bar -
of California. (At Downtown L.'A. Office.)
John F. Stuart, born San Francisco, California,
April 7, 1947; admitted to bar, 1972, California. Preparatory
education, University of San Francisco (A.B.. 1969); legal
education, University of San Francisco (J.D. 1972).. Lead
Articles Editor, University of San Francisco Law Review.
MANaTT, phELPS, ROTHENBERG & TUNNEY
January 15', 1982~
Page 10 '
Counsel, CalifOrnia State Banking Department, 1973-77;
Assistant Chief Counsel 1977-78. Member, State Bar of
California.
Paul 'J. Hall~ born San Diego, California, January 13,
1951; admitted to bar, 1975, California. Preparatory edu-
cation, University of.California at Santa Cruz (A.B. 1972);
legal education, Yale Law School, 1972-1973, University of
California at Berkeley'(Boalt Hall) (J.D. 1975). Member~:.
Los Angeles County and American Bar Associations; State Bar
of.California.
Maria D. Hummer', born Los Angeles, California,
'June 12, 1944; admitted to bar, 1976, California; District
of Columbia, 1979. Preparatory education,. Scripps College
(B.A. 1968); legal education, Uniuersity of California, Los
Angeles (J.D. 1976). Esterly Scholar. Board of Editors,
UCLA Law Review, 1975-76. Member, California Regional Water
Quality Control Board, Los Angeles Region, 1976--. Member:
Los Angeles County, Century City, and American Bar Associ- ·
ations; District of. Columbia Bar; State Bar of California.
James C. Corman, born Galena, Kansas, October 20,
1920; admitted to bar, 1949, California. Preparatory education,
University of California, Los Angeles (B.A. 1942); .legal
education, University~of Southern California (J.D. 1948).
Member: Los Angeles City Council, 1957-60; United States
House of Representatives, 1961-81; President's Advisory
Commission on Civil Disorders, 1967-68.~ Member: San
Fernando Valley, Los Angeles County, and American Bar'
Associations; State Bar of California. (At D~C_. Office.)
Jane Frank-Harman, born New York, New York, June 28,
1945; admitted to bar, 1969, District of Columbia. Prepara~
tory education, Smith College (B.A. 1966); legal education,
Harvard Law School (J.D. 1969). Phi Beta Kappa.. First
Chief Counsel and Staff Director, ~Subcommittee on Represen-
tation of Citizen Interests, Committee on the Judiciary,
U.S. Senate, 1973-75. Chief Counsel and Staff Director,
Subcommittee.on Constitutional Rights, Committee on the
Judiciary, U.S. Senate, 1975-77.~ Deputy Secretary to the
Cabinet, The White HouSe, 1977-78. Member: American Bar
Association; District of Columbia Bar; Federal Bar-Association;
Women's Bar Association; Women's Legal Defense~Fund; Federal
Judicial Center Committee on Experimentation.in the Law;
Council on the Role of the Courts. (At D.C.·Office.)-
MaNaTT, PHELPS, F~OTHENBErg & TUNNEY
January 15, 1982
P-age 11
David B.' Jacobsohn, born Springfield, Massachusetts,
December 18, 1943; admitted to bar, 1968, New York; 1980,
District of Columbia. Preparatory education, Cornell. Univer-
sity (B.A. 1965); legal education, Cornell University (J.D.
1968). Senior Staff Attorney, Securities and Exchange
Commission, 1967-~72. Director, Securities Disclosure Division,
Comptroller of the Currency, 1972'-78. Special Assistant to
Director William Isaac, Federal Deposit Insurance Corporation,
1978-79. Chairman, .Legal Problems of Bank Regulation;
Chairman, 15th and 16th Banking Law Institute; Co-author,
Federal Regulation of Banking. Member: Federal and American
Bar Associations; NeW-York Bar; District of' Columbia Bar.
(At D.C. Office.)
Harold E. Rogers, J~., born Chowchilla, California,
November 12, 1930; admitted to bar, 1955, California; 1967,
U.S. Supreme Court. Preparatory education, Stanford University
-(A.B. 1952); legal education, Stanford University (J.D.
1955). Phi Beta Kappa. Co-author, Water for California
(2 Vols.) and of-other publications on Municipal Finance;
Guest Lecturer on Municipal Finance; Chairman, Commission on
the Review of the Federal Impact Aid Program (Presidential
Appointment). Member: The Bar Association of San Francisco;
.American Bar' Association; State Bar of California. (At S.E-.
Office.)
K. Barry Schochet, born Asheville, North. Carolina,
May 18, 1947; admitted to bar, 1973, Georgia; 1974, Florida
and District of Columbia. Preparatory education, University
of North Carolina, Chapel Hill, (B.A.. 1969); legal education,
Emory University School of Law (J.D. 1972). Order of the
'Grail. Assistant Counsel, U.S. Senate Select Committee-on
Presidential Campaign Activities, Sam J. Ervin, Chairman
(Senate Watergate Committee), 1973-74. .Legislative Counsel
to U.S. Senator Richard Stone (Elorida) 1975-79. Counsel,
U.S. Senate. Committee on Foreign Relations 1979-81. Member:'
American Bar Association; District of Columbia Bar, The
Florida Bar; State Bar of Georgia. (At D.C. Office.)
Mary Jane Large, born New York, New York, November 13,
1950; admitted to bar, 1975, California and. District of
Columbia. Preparatory education, University of California
at Berkeley (A.B., 1971); legal education, University of.
California at Berkeley (Boalt Hall) (J.D. 1974). Editor,
Ecology Law Quarterly, 1972-74. Member: Los Angeles County
and American Bar Assocations; State Bar of California.
MANATT, PHELPS, ROTHENBERG &'TUNNEY
January 15, 1982
Page 12
Peter T. Paterno, born Queens, New York, February 3,
1951; admitted to bar, 1976, California. preparatory educa-
tion, Harvey Mudd College (B.S. 1972), University of Hawaii
(M.A. 1973); legal education, University of California, Los
Angeles (J.D. 1976). Member, State Bar of California.
Neal L. Petersen, born 'San Francisco, California,
February 4, 1937; admitted to bar, 1963, California. Prepara-
tory education, University of California, Berkeley'(A.B.
1958); legal education, Harvard Law School. (J.D. 1962).
Member: Federal and American Bar' Associations; District of
Columbia Bar. (At D.C. Office.)
Ross T. Schwartz, born~ Los Angeles, California,
August 9, 1949; admitted to bar, 1976, California. Prepara~
tory education, University of California, Berkeley (A.B.
1971); legal education, George Washington University (J.D.
1975). Member: Los Angeles County Bar Association; State
Bar of California.
Lisa Specht, born Los Angeles, California, Decem-
ber 5, 1945; admitted to bar, 1976, California. Legal educa-
tion, University of San Fernando Valley, College of Law: (J.D.
1976). Editor-in-Chief, USFV Law Review, 1974-75. Legal
commentator, KABC Television. Director, American. Civil
Liberties Union of Southern California, 1972-78. Board of
Governors, Women Lawyers' Association of Los Angeles, 1977--;
Chairperson, ACLU Women's Rights Project Southern California,
1971-78. Board of Governors, the Los Angeles Woman's. Building,
1979-- Director, Women's Political Committee 1977-- Member:
Los Angeles County, Beverly Hills, Century City, and American
Bar Associations; State Bar of California..
Peter D. Kelly, born Pasadena, California, July 30,
1948; admitted to bar, 1977, California; 1979, District of
Columbia. Preparatory education, California State Univer-
sity, Fullerton (B.A. 1972); legal education, Southwestern
University (J.D. 1976). Lead Articles Editor, Southwestern
University Law Review, 1975-76.' Member: Los Angeles Citi-
zens Advisory Committee on Airports, 1973; Los Angeles County
Probation Commission, 1976-77; California State University~
Fullerton, Alumni' Association Board of Directors, 1980.
California Democratic Party: Southern California Chairman,
1981--; Counsel, 1977-81; Chairman, Compliance Review Commis-
sion, 1978; Executive.Director, State of California, 1975-76.,
MANATT. PHELPS; ROthENBERG & TUNNEy
January 15, 1982.
Page 13
Southern. California, 1973-75; Finance DireCtor, 1972.
Campaign Manager, Yvonne Brathwaite Burke for State Attorney
General, 1978. California Finance Co-Chairperson, Carter/
Mondale Presidential Campaign, 1979-80. 19.80 Democratic
NatiOnal Convention:. Alternate Delegate; RUles Committee
Member. Member: Los Angeles County, Century City, and Ameri-
can Bar Associations; District of Columbia Bar; State Bar of
California.
Bert H. Deixler, born Bronx, New York, November 8,
1952; admitted to bar, 1976, CalifOrnia. Preparatory educa-
tion, George Washington University (B.A. 1973); legal, educa-
tion, Columbia University Law School. (J.D. 1976). Phi Beta
Kappa; Harlan Fiske Stone Scholar. Member, Columbia Univer-
sity'Journal of Environmental Law. Assistant U.S. Attorney;
Criminal Division, Central District of California, 1978-81.
Member: Los Angeles County and Federal Bar Associations.;
State Bar of California.
Irwin Jay Deutch, born Detroit, Michigan, August 5',
1941; admitted to bar, 1965, Michigan; 1980, California:
Preparatory education, University of Michigan (B.B.A. 1.962);~
legal education, University of Michigan (J.D. 1965); George-
town University (LL.M. in Taxation 1967). Order of the Coif.
Member: Los Angeles County, Beverly Hills, Michigan, Ameri-
can, and Federal Bar Associations; State Bar of California.
Julian Gresser, born New-York, New YOrk, Ju'ne 7,
1943; admitted to bar, 1971, California. Preparatory edu-
cation, Harva'rd University (A.B. 1965, M.A. 1967).; legal
education, University of California, Berkeley (Boalt Hall.)
(J..D. 1971). Member: California and Hawaii Bar Associa-
tions; State Bar of California.
Lee F. Colton, born Los Angeles, California,
February 12, 1936; admitted to bar, 1962, California. Prepa-
ratory eddcation, University of California at Los Angeles
(B.S. 1958); legal education, University of California School'
of Law at Los Angeles (LL..B. 1961). Member: State Bar of
California.
MANATT, PHELPS. F~OTHENBERG & TUNNEY
January 15, 1982
Page 14
Jerry J. Goldstein,. born Los Angeles,' California,
'November 3, 1943; admitted to bar,' 19-74, CalifOrnia. Prep-
'aratory education, University of California, Berkeley (B.S.
1966); legal education, University of San Francisco (J.D.
1974). Member, McAuliffe Law HonOr Society. Assistant
Editor, University of San Francisco Law Review~ 1973-74.
Extern to Justice-Raymond L. Sullivan, Supreme Court of Cali-
fornia, 1973. Member: Beverly Hills and American Bar Asso-
ciations; State Bar of California.
Barbara J. Zuckerman, born Los Angeles, Califor-
nia, August 6, 1948; admitted to bar, 1975, California.
Preparatory education, University of Southern California
(B.A. 1971); legal education, Loyola University (J.D. 1974).
Member: Los Angeles County, Beverly Hills, and American Bas
Associations; State Bar of California.
Steven A. Nissen, born. Los Angeles, California,
March 25, 1951; admitted to bar, 1976, California; 1980,
District of Columbia. Preparatory'education, Stanford
University (B.A. 1972); legal education, University of Cali-
fornia, Berkeley (Boalt Hall) (J.D. 1976). Commissioner,
Los Angeles County Rent~ Adjustment Board. Memberr Los
Angeles, Century City, Beverly Hills (Board'of Governors,
Barristers), and'American Bar Associations; District of
Columbia Bar; State Bar of California.
'Lawrence J. Blake, born New York, New York, Novem-
ber 28, 1950; admitted to bar, 19'76, California. Prepara-
tory education, Le Moyne College (B.A. 1972); legal educa-
tion, Harvard Law School (J.D. 1976). 'Member: Los Angeles
County and Beverly Hills (Secretary, Barristers; Co-Chairperson,
Bar.risters' Committee for the Arts) Bar Associations; State
Bar of California.
Frederica R. Obrzut, born Los Angeles, California,
December 22, 1949; admitted to bar, 1977, California. Pre-
paratory education, University of California, Santa Barbara
(B.A. 1971), University of CalifOrnia, Los Angeles (M.A.
1974); legal education, University of'California, Los Angeles
(J.D. 1977). Managing Editor, UCLA Law Review, 1976-77.
Member, State Bar of California.
MANATT PHELPS. ROTHENBERG & TUNNEY
January 15-, 1982
Page 15
Howard E. King, born Berkeley, California, October 3,
1952; admitted t0~bar, 1977, California. Preparatory educa-
tion, University of California at Los Angeles (B.A. 1974);
legal education, University of California at Los Angeles
(JiD. 1977). Chief Justice, Moot Court Honors Program.
Member: American Ba= Association; State Bar of California.
Keith T. Holmes, born Chicago, Illinois, June 17,
1952; admitted to bar, 1977, California. Preparatory educa-
tion, Northwestern University (B.A. 1974); legal education,
University of Pennsylvania (J.D. 1977). Order of the Coif:'
Editor, University of Pennsylvania Law Review. Member: Los-
Angeles County Bar Association; State Bar of California.
(At. Downtown L.A. Office.)
Timothy Patrick' Furtong,.born Dallas; Texas,
November 24, 1946; admitted to bar, 1977, CalifOrnia; 1980,
District of Columbia. Preparatory education, University of
Texas (B.A. 1969); legal education, University of Texas (J.D.
1977). Legislative. Assistant to Senator Lloyd Bentsen,.
1971-74; Special Assistant to Senator Lloyd Bentsen; 1975-76.
Member: American Bar Association; District of Columbia Bar;
State Bar of California. (At D.C. Office.)'
Stephen D. Greenberg, born New York, New York,
September 8, 1948; admitted to bar, 1.977', California. Prepa-
ratory education, Yale University (B..A. 1970); legal educa-
tion, University of California, Los Angeles (J.D. 1977).
Member, UCLA Law Review, 1975-77. Member, State Bar of
California.
Louis A. Spoto, born Brooklyn, New York, May 12,
1950; admitted to bar, 1978, New York; 1978, California.
Preparatory education, Colgate University (B.A. 1972); legal
education, Harvard Law School (J.D. 1977). Clerk, Judge
Robert J. Kelleher, U%S. District Court,. 1977-78. Board of
Editors, Journal on Legislation. Member: New York Bar;
State Bar of California.
Nancy R. Schauer, born Detroit, Michigan, Septem-
ber 9, 1950; admitted to bar, .1976, C'alifornia. Preparatory
education, University of Michigan (A.B. 1972); legal' educa-
tion, University of Michigan (J.D.. 1976). Member, Univer-
sity of Michigan Journal of Law Reform~ Member: Los Angeles
County and American Bar Associations; State Bar" of California.
MANATT, PhElps, ROThENBERG & TUNNEY
January' 15, 1982
Page 16
William S. Brunsten, born Los Angeles, California,
April 6, 1947; admitted to bar, 1974, California. Prepara-
tory education, University of California, Berkeley (B.Ai
1970); legal education; University of California, Los Angeles
(J.D. 1974). Member: .Los Angeles County, Beverly-Hills,
and Century City Bar Associations; State Bar of California.
Lawrence J. Ulman, born FluShing, New York,
January 25, 1950; admitted to bar 1975, California. Prepar-
atory education, University of Southern California (A.B.
1972); University of California, Los Angeles (M.B.A. 1980);
legal education, University of Southern California (J.D.
1975). Recipient, ASCAP Nathan Burkan Memorial Award in
'Copyright. Member: Los Angeles County and American Bar
Associations; Copyright Society of the U.S.A.; State Bar of'~
California.
Isabel Weil, born New York, New York, April 5,
1949; admitted to bar, ~1973, New Jersey; 1981, California.
Preparatory education, Barnard College (B..A. 1970); legal ;
education, University of Pennsylvania (J.D. 1973). Member:
American Bar Association; New Jersey State Bar; State Bar of
California.
John B. Emerson, born Chicago, Illinois, January ll,
1954; admitted to bar, 1978, California. Preparatory educa-
tion, Hamilton College (A.B. 1975); legal education, Univer-
sity of- Chicago (J.D. 1978). Phi Beta Kappa; Phi Delta Phi.
Member: American Bar~ Association; State Bar of California.
William T. Quicksilver, born St. Louis, Missouri,
July 26, 1952; admitted to bar, 1978, California. Prepara-
tory education, Princeton University (A.B. 1974); legal educa-
tion, University oS Chicago (J.D.. 1978). Associate Editor,
Chicago Law Review. Member, State Bar of California.
Nikki Wolontis, born Morristown, New Jersey,
April 27, !953;. admitted to bar, 1978, California. Prepara~
tOry education, New York University (B.A. 1974); legal educa-
tion, Stanford University (J.D. 1978). Phi Beta Kappa.
Extern Clerk, Judge George W. Phillips, Jr., Superior COurt,
Alameda County (1977-78). Founding Member, Stanford Public
Interest Law Foundation. Member: Los Angeles County and
American Bar Associations; State Bar of California.
MANATT. PhElPS'. ROThENbERG & TUNNEY
Jaaeary 15, 1982
Page 17
Mary Elizabeth Doyle, born Sacramento, California,
May 1, 1952; admitted to bar, 1979, California. Preparatory
education, University of California,. Santa Cruz (A,B. 1974);
legal education, University of California, Berkeley (Boalt
Hall) (J.D. 1978). Member: Berkeley Law Foundation; Ameri-
can, Beverly Hills, and Century City Bar Associations; State
Bar of California.
Edward C. Rybka, born Passaic, New Jersey, Septem-
ber 29, 1953; admitted to bar, 1978, California. Prepara-
tory education, The Sorbonnei Paris, France, and Princeton
University (A.B. 1975); legal education, Duke University
(J.D. 1978). Member: Los Angeles County Bar Association;-
State Bar of California.
Steven M. Goldberg, born Bronx, New York,
February 19, 1954.; admitted to bar, 1978, California; 1979,
New York. Preparatory education, Harvard University (A.B.
1975); legal education, New. York University School of Law
(J.D. 1978). Member, New York University Law Review, 1976-77.
Member: Los Angeles County and Beverly Hills Bar Associa-
tions; State Bar of California.
Matthew S. Steinberg~, born Los Angeles, California,
October 20, 1953; admitted to bar, 1978, California. Prepa-~
ratory education, University of California, Berkeley (B.A.
1975); legal education, University of San' Diego (J.D. 1978).'
Member: Los Angeles County and American Bar Associations;
· State Bar of California.
Jeffrey M. Wernick, born Brookl.yn, New York,
June 20, 1953;.admitted to bar, 1979, New York; 1981, Cali-
fornia. Preparatory education, State University of New York
at Buffalo (B.A. 1974); legal education, New York University
(j.D. 1978). Member: New York Bar; State Bar of California.
Peter J. Ross~ bo·rn New York, New York, June 10,
1953; admitted'to bar, 1979, New York. Preparatory educa-
tion, Yale University (B.A. 1975); legal education, Emory
University (J.D. 1978). Member: American Bar Association;
Sta~e Bar of-New York. (At S.F. Office.) -·
Andrew Stuar. t Pauly, born Los Angeles, California,
January 18, 1955; admitted to bar, 1979, California. Prep-·
aratory education, Lewis & Clark College (B.A. 1976); legal~
MANATT, PHELPS. F~OThENBERg & TUNNEY'
January 15,' 1982
Page 18
educationl University of California, Los Angeles (J.D. 1979).
Member: Los Angeles County, Century City, and American Bar
Associations; California Trial Lawyers Association; State
Bar of California.
Joan Whitehead Evans, born Waukegan, Illinois,
December 31, 1949. Preparatory education, Illinois State
University (B.S. 1970, M.S. 1972), University of California,
Los Angeles (M.B.A. 1979); legal education, University of
California, Los Angeles (J.D. 1979). Moot Court Executive
Board of Judges, 1978. Director, Legal Aid Foundation.
Member: Sex Equity Commission, Los Angeles Unified School
District; National Bar Association; State Bar of California.
Barbara J. Schlain, born_Detroit, Michigan, May 15,~
1954; admitted to bar, 1979, California. Preparatory educa-
tion, University of Michigan (B'.A. 1975); legal education,
University of Michigan (J.D. 1979). Editor', Michigan Year-
book of~ International Legal Studies. Member: State Bar of
California. (At Downtown L.A. Office.)
Susan 5erner, born Brooklyn, New York, March 17,
1951; admitted to bar, 1979, New York; 1981, California.
Preparatory education, University of Chicago (B.A. 1973);
legal education, New York University (J.U. 1978). Member:
New York Bar; State Bar of. Cali£ornia..
Benet E. Long, born. New York, New York, September
15, 195~; admitted to bar, 1979, Washington, D.C.. Prepara-
tory education, University of Virginia (B.A. 1976); legal
education, Washington College of Law, The American Univer-
sity (J.D. 1979). Member, District of Columbia Bar.
(At D.C. Office.)
Arn H. Tellem, born Philadelphia, Pennsylvania,.
February 21, 1954; admitted to bar, 1980, California. Prepa-
ratory education, Haverford College (B.A. 1976); legal educa--
tion, University of Michigan (J.D. 1979). Member, State-Bar
of California.
Terry D.- Garcia, born Jacksonville, Florida,
March 27, 1953; admitted to bar 1980, District of Columbia.
Preparatory education, American University(B.A. 1975); legal
education, George Washington University (J.D. 1980). Staff
Member, Journal of' International Law and Economics. Member,
MANATt. PHELPS. ROtHENbeRG & TUNNEY
January 15, 1982
Page 19
District of Columbia Bar. Co-aUthor., Federal Regulation of'
Banking. (At Downtown L.A. Office.)
Steven Marcus Knisley, born Santa Monica, Cali-
fornia, February 26, 1952; admitted' to bar, 1980, California.
Preparatory education, Yale University (A.B. 1974); legal
education, Harvard Law School (J.D. 1980). Member, State
Bar of California.
Jane L. Ellison, born Mansfield, Ohio, January~ 16,
1956; admitted to bar, 1980, California. Preparatory educa-
tion, Cornell University (A.B. 1977); legal education, Univer-
sity of Chicago. (J.D. 1980. Phi Beta Kappa; Phi Delta Phi..
Member, State Bar of California.~
Rita Eidson DeBoer, born Princeton, Illinois, May 5,
1953; admitted to bar, 1980, California. Preparatory educa-~
tion, Scripps College (B.A. 1975), Harvard University (M.T.S.
1977); legal education, University of California, Los Angeles
(J.D. 1980). Rockefeller Fellow; .1975-76. Chief Comment
Editor, UCLA Law Review, 1979-80. Member: Women Lawyers
Association of Los Angeles; State Bar of California.
Leslie A. Swain, born Long Beach, California,
April 26, 1953; admitted to bar, 1980, California. Prepara-
tory education, California State Universtiy, Long Beach (B.A.
1977); legal education, University of California at Davis
(J.D. 1980). Member, UC Davis Law Review 1979-80.. Member:
King Hall Legal Foundation, Los Angeles County and Century
City Bar Associations; State Bar of-California.
Alan Mintz, born New York, New York, May 18, 1954;
admitted to bar, 1980, California~ Preparatory education
University of California, Berkeley (A.B. 1976); legal educa-
tion: Los Angeles Bar Association; University of'Califor-
nia, Los Angeles (J.D. 1980). Member, State Bar of
California.
Masahiro Shimojo, born Gifu, Japan, March 19, 1944;
admitted to bar, 1973, Japan. Legal education, Tokyo Univer-
sity (L.L.B. 1966).; Legal Training and Research Institut~e
(1973); University of Michigan Law School (M.C.L. 1980).
Member, The First Tokyo Bar Association.
MaNatt, PHELPS. ROTHENBERG'& Tunney
January 15, 1982
Page 20
John W. Cochrane, born Cleveland, Ohio, December 12,
1955; admitted to bar, 1980, California. Preparatory educa-
tion, University of California, Davis (A.B. 1977); legal
education, University of California, Los Angeles (J.D. 1980).
Member, State Bar of California.
Gary Hal Amsterdam, born Chicago, Illinois,
March 21, 1957; admitted to bar, 1981, California. Prepara-
tory education, University of Texas, Austin. (B.A. 1977);
legal education, University of Texas, Austin (J.D. 1980).
Phi Beta Kappa. Member, State Bar of California.
Enda Thomas Brennan, born_ Galway, I~eland,
October 31, 1955; admitted to bar, 1980, California. Prep-
aratory education, University of California; Berkeley (A.B..
1976); legal education, Harvard Law School (J:D. 1980). Phi
Beta Kappa. Member, State Bar of California.
Ellen B. Behravesh, born Pottstown~, Pennsylvania,
August 31, 1951; admitted to bar, 1977, Pennsylvania; 1978,
District of Columbia. Preparatory education,. University of
Pennsylvania (A.B. 1973) legal education, University of Penn-
sylvania School of Law (J.D. 1977), Georgetown University
Law Center (LL.M. in Taxation 1981). Delta Theta Phi.
MEmber: Pennsylvania and American Bar Associations; Ameri-
can. SocietY of International Law; Pennsylvania Bar; District
of Columbia Bar.
Richard A. Kale, born Brooklyn, New York, January 29,
1955; admitted.to bar, 1980, California. Preparatory educa-
tion, University of California, BerkeleY (A.B. 1976); legal
education, Yale Law School (J.D. 1980). Phi. Beta Kappa.
Member, State Bar of California.
Barbara Zipperman, born Los Angeles, California,
September 3, 1953; admitted to bar, 1980, California. Prepa-
ratory education, Princeton University (A.B. 1975); legal
education, University of California, Davis (J.D. 1980).
Member: Los Angeles County and Beverly Hills Bar Associa-
tions; State Bar of California..
Anne H. Krummenacher, born St. Louis, Missouri,~
November 22, 1951; admitted to bar, 1981, California. Prepa-
ratory education, Occidental College (A.B. 1973); legal educa-
tion, Loyola Law School (J.D. 1980). Member, State Bar of
California.
MANATT. PHELPS. ROTHENBER'g & TUNNEY
January 15, 1982
Page 21
Shinaan S. Krakowsky, born Brooklyn, New York,
January 8, 1954; admitted to bar, 1981, California.
Preparatory education, State University of New York at
Buffalo (B.A 1976); legal education, Southwestern University
(J.D. 1981). Member: State Bar of California.
David W. Crumpacker, born Woodland, California,
NOvember 16, 1955; admitted to bar, 1981, California. Prepa-
ratory education, University of Colorado (B.A. 1978); legal
education, G~o. rg~ Washington University (J.D: 1981). Phi
Beta Kappa. 'Member: State Bar of California.
K~ Terrance Garckenl, born Los Angeles, California,
January 24, 1948; admitted to bar, 1981, California. Prepa-
ratory education, University of California, Santa Barbara
(B.A. 1970); legal education, University of California, Los
Angeles (J.D. 1981). Member: State Bar of' California.
Ginna Ingram, born Los-Angeles, California,
January 18, 1956; admitted to bar, 1981, California. Prepa-
ratory education, University of California, Berkeley (B.A.
1978); legal education, University of California, Davis (J.D.
19.81). Member: State-Bar of California..
Carol J. Moore, born New Haven, Connecticut,
September 8, 1956; admitted to bar, 1981,. California. Prepa-
ratory education, Radcliffe College (A.B. 1978); legal educa-
tion, Harvard Law School (J.D. 1981). Member: State Bar of
California..
Jody E. Graham, born Detroit, Michigan, August 21,
1955; admitted to bar, 1981, California. Preparatory educa-
tion, University of California, Santa Barbara (B.A. 1977);
legal education, University of California, Davis (J.D. 1981).
Member: S~ate Bar of California.
Deborah A. Lee, born Oakland, California, March 8,
1956; admitted to bar, 1981, California. Preparatory educa~
tion, University of California, Davis (A.B. 1978); legal
education, University of California, Davis (J.D. 1981).
Member: State Bar of California.
Carol~ L. Mayall, born Burbank, California, January 9
1955; admitted to bar, 1981, California. Preparatory educa-
tion, University'of California, Irvine (B.A. 1977); legal
MANAtT PHELPS. ROthENBERg & TUNNEY
January 15, 1982
Page 22'
education, University of California, LOs Angeles (J.D. 1981).
Member: State Bar of California.
Marc H. Rapaport, born New York City, February 6,
1957; admitted to bar, ~1981, California. -Preparatory educa-
tion, Wharton School, University of Pennsylvania (B.S. 1978);
legal education, Harvard Law School (J.D. 1981). Member:
State Bar of California.
Eugene Tanaka, born Chicago, Illinois, June 5,
1956; admitted to bar, 1981, California. Preparatory'educa-
tion, Columbia University (B.A. 1978); legal education,
Columbia University (J.D. 1981). Member: State'Bar of
California.
Helen Elmquist Cutler, born Iowa City, Iowa~
August 31, 1938;- admitted to bar, 1981, California. Prepara-
tory education, University of Southern California (B.A. 1960);
legal education, University of California, Los Angeles (J.D.
1981). Extern Clerk, Justice Rodney K. Potter, California
Court of Appeal, Second District (Los Angeles), Spring 1980.
Member: State Bar of California.
Daniel L. Appelman, born Los Angeles, California,
December 29, 1944; admitted to bar, 1981, California. Prepa-
ratory education, San Francisco State University (B.A. 1968,
M'.A. 1973); Temple University (Ph.D 1982); legal education,
University of-California, Los Angeles (J.~D. 1981). Member:
State Bar of California.
Diane J. Gideon, born Queens, New YOrk, December 1,
1955. Preparatory education, University of California, Los
Angeles (B.A. 1977); legal education, University of Cali-
fornia, Los Angeles (J.D. 1981).
Laurie Karon, born Highland Park, Illinois,
August 16, 1956. Preparatory education, Northwestern Univer-
sity (B.S. 1977); legal education, University of Illinois
(J.D. 1981).
The following will be joining the firm in 1982.
Philip Recht, 'born Pittsburgh, Pennsylvania,
June 10, 1953. Preparatory education, Yale University (B.A.
1975); legal education, University of Pennsylvania (JiD.
1981).
HANATT PHELPS. ROTHENEIERG & TUNNEY
January 15, 1982
Page 23
Elizabeth Watson, born Lakewood, Ohio, July 20,
1955. Preparatory education, NorthweStern University (B.S.
1977); ~legal education, University of Southern California
(J.D. 1981).
Roger Lane Carrick, born High Point, North Carolina,
July. 28, 1951; admitted to bar, 1980, California. Prepara-
tory education, Harvard College. (A.B. 1973, Ph.D 1975); legal
education, University of California, Berkeley (Boalt Hall)
(J.D. 1980). Member,~State Bar.of California.
Darry Sragow, born May 17, 1946. Preparatory
education, Cornell University (B.S. 1966); University of
Pennsylvania (M.A. 1968); legal education (J.D. 1981).
Tot Braham. Preparatory education, Columbia
College (A.B. 1979); legal education, New York. University.
Helen L. Delaney. Preparatory education, Cornell
University (B.A. 1979); legal education, University of Cali-
fornia, Berkeley (Boalt Hall).
Timothy J.~ Hoy, born May 13, 1956. Preparatory
education, Oberlin College (B.A. 1978); legal education,
University of Michigan.
Brad R. Krevoy. Preparatory education, Stanford
University (B.A. 1978); legal education, Hastings College.
Kenneth Krug, born October 25, 1958. Preparatory
education, Duke University (A.B. 1979); legal education,
University of Chicago.
Robert D. Lee. Preparatory education, Harvard
College (B.A. 1978); legal education, Georgetown. Law Center.
Dennis A. Miller. Preparatory education, Univer-
sity of California, San Diego (B.A. 1978); legal, education,
University of California., Berkeley (Boalt Hall).
Brad A. Morrice. Preparatory education, Claremont
Men's College (B.A. 1978); legal education, University Of
California, Berkeley (Boalt Hall).
MANATT. PHELPS, ROTHENBeRG & TUN EY
January 15~ 19'82
Page 2~-
Matthew P. ~u'ilter. Preparatory education,
Princeton University (iB.A.. 1.974); legal education, UniVer-
sity of Pennsylvania.
Ronald-L. Rddgers, Jr., born Brawley, 'California,.
February 2, 1956. Preparatory education, University of
Southern California (B.A. 1979); legal education, George
Washington University.!
Charles M. Shumaker III. Preparatory education,
Tufts University (B.A.1 1976), Columbia University (M.A. 1979);
legal education, University of Michigan.
Steven M..Si~emens. Preparatory education, Stanford
University (B.A. 1976)i; legal education, Hastings College.
T
Cary H. hompson, born Winchendon, Massachusetts,
August 4, 1956. Preparatory education, University of Cali-
fornia, Berkeley (B.A.. 1978); legal education, University
Southern California.
The following persons wil'l be working with the
firm as summer associates during the summer of 1982:
John Michaeli Alongi. Preparatory education~
University of California, Davis (B.A. 1979); legal educa-
tion, University of Ca!lifornia, Davis.
Peg O. Case~. Preparatory education, Gannon
College (B.A. 1974); legal education~ University of Southern
California Law Center.
Mona A. Cleei. P'reparatory education, Austin college
(B.A.); University of iTexas .at Austin (M.B.A.; legal educa-
tion, University of Texas School of Law.
I
Mitchell H-!Cohen. Preparatory education, Brown
University (A.B. 1980)i; legal education, New York UniversitY
School of Law.
Christina De,sser. Preparatory education, Univer-
sity of California, Belrkele~ (B.A. 1978); legal education,
McGeorge School of Law
NIANATT PHELPS, F~OTHENBERg & TUNNEY
January 15, 1982
Page 25
Julie R. Fenster. Preparatory educatiOn, Brown
University (A.B. 1979); legal education, University of Penn--
sylvania Law School.
Michael Allen' Firestein. Preparatory education,
Brown University (A.B. 1980);. legal education, Northwestern
University School of Law.
Brian K. Lipson. Preparatory education, Univer-
sity of Michigan (A.B. 1978); legal education, University of
Pennsylvania Law School.
Marshall M. Howell. Preparato=y education, Massa-
Chusetts Institute of Technology (S.B. 1980); legal educa--
tion, Harvard Law School.
Clare Bronowski Koopersmith. Preparatory educa-
tion, Harvard University (B.A. 1976); legal education,.
University of. California, Los Angeles.
Steven Alan Laub. Preparatory education, Univer-
sity of California, Los Angeles (B.A. 1980); legal educa-
tion, Harvard Law School.
John Jo Little. Preparatory education, Cook
College/Rutgers (.B.S. 19.80); legal education, Yale Law
School.
Michael T. Maurer. Preparatory education, Iowa
State University (B.A. 1980); legal education, University of
Michigan Law School.
Scott Wil.~am Pink. Preparatory education, Harvard
University (B.A. 1980); legal education, Harvard. Law School.
Pa~ Renee Spengler. Preparatory education, Yale
University (B.A. 1978); legal education, Yale Law School.'
Daniel G. Swanson. Preparatory education, Univer-
sity of California, Berkeley (A.B. 1979); legal education,
Harvard Law School.
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