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HomeMy WebLinkAboutStaff Report 5.C 12/01/201401 DATE: December 1, 2014 Agenda Item #5.0 TO: Honorable Mayor and Members of the City Council through City Manager FROM: Sue Castellucci, Housing Coordinator, ,L � SUBJECT: Resolution Approving the Issuance of Multifamily Housing Revenue Bonds for the Purpose of Financing the Acquisition, and Rehabilitation of Park Lane Apartments. RECOMMENDATION It is recormnended that the City Council adopt the attached Resolution Approving the Issuance of Multifamily Housing Revenue Bonds for the Purpose of Financing the Acquisition and Rehabilitation of Park Lane Apartments. BACKGROUND The Park Lane Apartments project is an acquisition/rehabilitation of an existing affordable housing apartment complex. The project is an existing 90 -unit, two-story garden style building built in 1973. The project's 90 units will be restricted to residents with household incomes no greater than 60% of the Area Median Income with the exception of the one managers unit. The project will include substantial rehabilitation to address replacement of major building systems, will increase energy and water efficiency, and will include a 20 year renewal of the Housing Assistance Payment (I -IAP) contract. The developer is Burbank Housing Development Corporation. The development and support of low-income work -force housing is one of the highest priorities of the City's Housing Element, and 2010-2015 Consolidated Plan. DISCUSSION The goal of the requested City Council action is to complete the Financing plan to allow start of the rehabilitation of Park Lane Apartments. Burbank Housing Development Corporation is recommending a financial strategy similar to that utilized in financing the recently approved Round Walk Village apartments. The developer has requested that the California Municipal Finance Agency (CMFA) issue bonds for the project. The City has been a member of that Joint Powers Authority since January 2007. There are a series of actions necessary to accomplish this transaction: (1) The Internal Revenue Code of 1986 requires that the City Council conduct a public hearing known as a TEFRA hearing (Tax Equity Fiscal Reform Act) to authorize the issuance by another agency of tax exempt housing revenue bonds. The TEFRA hearing is simply an opportunity for all interested persons to speak or to submit written comments concerning the proposal to issue debt and the nature or location of the proposed project. (2) A resolution by the City Council approving the issuance of multi -family revenue bonds is required in the application for bond allocation. The resolution does not commit. approve or constitute any other action or funding for the project by the City. (3) Following the adoption of the resolution, CMFA will proceed with the submission to the California Debt Limit Allocation Committee (CDLAC) of an application for `private activity bond" allocation for the project. FINANCIAL IMPACTS The City's membership in CMFA bears with it no cost or other financing obligations, but serves as a public acknowledgement by the City of the project financing. The City will not be a party to the bond financing documents. The debt will not be secured by any form of taxation or by any obligation of either the City or CMFA; neither would the debt represent or constitute a general obligation of either the City or CMFA. Pursuant to the governing California statutes and the JPA Agreement, a member of CMFA is not responsible for the repayment of obligations incurred by CMFA. The debt will be payable solely from amounts received pursuant to the terms and provisions of financing agreements to be executed by Burbank Housing. In the financing documents the developer will also provide comprehensive indemnification to CMFA and its members, including the City. ATTACHMENTS Resolution RESOLUTION NO. CITY OF PETALUMA RESOLUTION OF THE CITY COUNCIL APPROVING THE ISSUANCE OF MULTIFAMILY HOUSING REVENUE BONDS FOR THE PURPOSE OF FINANCING THE ACQUISITION AND REHABILITATION OF PARK LANE APARTMENTS WHEREAS, the California Municipal Finance Authority (the "Authority") is authorized by the laws of the State of California (the "Law") to execute and deliver multifamily housing revenue obligations for the purpose of financing the acquisition, construction/rehabilitation and development of multifamily residential rental facilities located within the area of operation of the Authority which are to be occupied by very low and low income tenants; and WHEREAS, Burbank I-tousing Development Corporation, a California nonprofit public benefit corporation, on behalf of a limited liability company or limited partnership related to or to be formed by Burbank Housing Development Corporation (the `Borrower"), has requested the Authority to issue and deliver multifamily housing revenue obligations in the anticipated principal amount of $18,500,000 (the "Obligations'), the proceeds of which may only be used for the purpose of financing the acquisition and rehabilitation of a 90 -unit multifamily residential rental facility commonly known as Park Lane Apartments located at 109 Magnolia Avenue in the City of Petaluma, California (the "Project"); and WHEREAS, the Obligations which are expected to be issued and delivered to finance the acquisition and rehabilitation of the Project would be considered "qualified exempt facility bonds" under Section 142(a) of the Internal Revenue Code of 1976, as amended (the "Code"), and Section 147(t) of the Code requires that the "applicable elected representatives' with respect to the jurisdiction in which the Project is located hold a public hearing and approve the issuance and delivery of the Obligations; and WHEREAS, the City Council of the City of Petaluma as the "applicable elected representatives' to hold said public hearing, has held said public hearing at which all those interested in speaking with respect to the proposed financing of the Project were heard. NOW, THEREFORE, BE IT RESOLVED as follows: 1. The City Council hereby finds and determines that the foregoing recitals are true and correct. 2. For purposes of the requirements of the Code only and in accordance with Section 4 of the Joint Exercise of Powers Agreement Relating to the California Municipal Finance 3 Authority, dated as of January 1, 2004, the City Council hereby approves the proposed financing of the Project by the Authority with the proceeds of the Obligations. 3. The issuance and delivery of the Obligations shall be subject to the approval of and execution by the Authority of all financing documents relating thereto to which the Authority is a party and subject to the sale of the Obligations by the Authority. 4. The adoption of the Resolution is solely for the purpose of meeting the requirements of the Code and shall not be construed in any other manner, the City nor its staff having fully reviewed or considered the financial feasibility of the Project or the expected Financing or operation of the Project with regards to any State of California statutory requirements, and such adoption shall not obligate (i) the City to provide financing to the borrower for the acquisition and rehabilitation of the Project or to issue the Obligations for proposes of such financing; or (ii) the City, or any department of the City, to approve any application or request for, or take any other action in connection with, any envirorunental, General Plan, zoning or any other permit or other action necessary for the acquisition, rehabilitation, development or operation of the Project. 5. The City Clerk of the City shall forward a certified copy of this Resolution to: Thomas A. Downey The Orrick Building Orrick, Herrington & Sutcliffe, LLP 405 Howard Street San Francisco, CA 94105 6. This resolution shall take effect upon its adoption. PASSED AND ADOPTED this I" day of December, 2014 by the following roll call vote: m