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HomeMy WebLinkAboutAgenda Bill 6.A 02/28/2011A L try Tr8;g8.- DATE. - TO FROM: SUBJECT: r I February 28, 2011 Honorable Mayor and Members of 'the City "Council through City Manager Bovine Gaebler, Housing Administrator bp1� Resolution Of'The °City Of Petaluma City Council Approving The Issuance By The Association.OfBay Area Governments Financing Authority For Nonprofit Corporations. Of Multifamily Housing Revenue Bonds. For The Purpose Of Financing The Acquisition And Construction Of Vintage Chateau II Senior Apartments. RECOMMENDATION It is recommended that the City Council adopt the attached Resolution Approving The Issuance Of Multifamily Housing Revenue Bonds By The Association Of Bay Area Governments Financing Authority For Nonprofit Corporations For The-Purpose Of Financing The Acquisition And Construction Of Vintage Chateau II Senior Apartments i BACKGROUND Vintage Chateau lI is an approved 68 -unit affordable senior rental apartment community that will be developed by Vintage, Chateau, L.P , a California limited partnership (Borrower) (Developer) Vintage Chateau, L.P. Man entity formed and control , led by USA Properties Fund, Inc .lo develop the property. All affordab e'hous ng developments are owned by separate Lirnited.Partnership entities so that.the tax credit investor can utilize the tax credits that the project generates. The Limited Partnerships are,comprised of three components: (1) - the Limited Part, ner (tax credit investor); (2) Administrative General Partner (USA Properties; Fund', the . coritrolling entity of the limited partnership); and (3) the Managing General Partner (the nonprofit, who provides resident services and qualifies for the property tax abatement). The property address is 325 North McDowell Blvd, immediately adjacent to Vintage Chateau I, which was developed . n 1998. PCDC allocated $2.5 M in FY 2008 =09 and $2 M in the current budget modification to the Project for site acquisition, pre- development, and development, expenses. (All allocations are from the PCDC Low -Mod „Housing Set - aside Fund and. have no impact on the General :Fund.) The development and support of lo'w= income aenor housing is a top priority of the 2009-2014 City Housing Element, 2'010 -2015 Consolidated Plan; and 2007 2012 PCDC Implementation Plan. Agenda Review City Attorney Finance Director City Manager DIS'CUSSION The goal of the recommended action is to complete the financing plan to allow start of construction of Vintage Chateau II in summer of 2011. The Developer is proposing a financial strategy similar to that utilized in,financing Vintage Chateau I. This financing plan includes tax - exempt mortgage revenue bonds low- income housing tax credit equity, deferred developer fee and 'PCDC low /mod funding to fund, a total development cost of approximately $15.9 M. Following is an explanation of each funding source: i Tax! exempt Mortgage Revenue Bonds ($8.1M during construction period paid down to $5.7 ermanent These bonds are underwritten y Capital ): derwritten b CitiCommunity and Freddie Mac based on p" the debt that the property can support. The repayment of these bonds issued by ABAG is solely the responsibility of the Borrower and'the credit enhancement provider (Freddie Mac). The Borrower will provide a comprehensive indemnification to ABAG and its members including the City, low.Income Housing Tax Credit Equity ($5M): The Developer will sell the federal low income housing tax credits.securedfior the development of the property to an investor to obtain equity funds to partially finance the development. Deferred Developer Fee ($700K): The Developer will defer a portion of their developer fee which will be repaid by the residual cash flow of the property. PCDC Low /Mod Housing Fund ($4.5M): The City, through,the PCDC, will fund a poan repayable from residual cash flow of the propertyto assist ni the development of the property. The Developer has requested that the, Association of Bay Area Governments (ABAG) Financing Authority for Nonprofit Corporations (Authority) issue.bonds for the Project, The City has been a member of the Authority's Joint Powers Agreement since 1"998. 'There are a series of actions necessary to accomplish this transaction: (1) The Internal Revenue Code of 1.986 requires that the City publish notice of and the City Council conduct a public hearing known as a TEFRA (Tax Equity Fiscal Reform Act) hearing to autho' 6ze, 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 corm ents concerning the proposal to issue debt and'the or location of the proposed Proj bet. (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. Please note in the Resolution that ihe` principal _amount of $8,500,000 (Paragraph 2) differs .from tax equity bond_proceeds listed under "Discussion" above ($5.7M). The reason for the difference is the IRS requirement that at least 50 % of `project costs must be financed with these tax exempt bonds. The additional N bond proceeds are used during construction and repaid when the project converts to permanent financing. (3) Following the adoption of the resolution, the Authority will proceed with the submission to the California Debt Limit Allocation Committee.(CDLAC) of an application for "private activity bond" allocation`for the Project. i Financial.Impact: The City's membership in the Authority`b:ears with it.no cost or other financing obligations. The totaL City Housing Funds in this project is $4.5M. $2.5M was appropriated in FY 2008 to be utilized. for site acquisition and.predevelopment expenses. A bud for FY 2011, in the amount of $2M, will fill the gap needed to proceed to construction in Summer of 2011. 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 ABAG; neither would the debt represent or constitute a general obligation of either the, City or ABAG. Pursuant to the governing California statutes and the JPA Agreement, a member of ABAG is not responsible for the fepayment of obligations incurred by ABAG. The debt will be payable solely from amounts received pursuant to the terms and provisions of financing agreements to be executed by USA Properties Fund. In the financing documents the Developer will' also provide comprehensive indemnification to ABAG and its members, including the City. ATTACHMENTS 1. Resolution Tefrahearingvc2 /d 3 RESOLUTION NO. CITY OF PETALUMA RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PETALUMA APPROVING THE ISSUANCE OF MULTIFAMILY HOUSING REVENUE BONDS BY THE ASSOCIATION OF BAY AREA GOVERNMENTS FINANCING AUTHORITY FOR NONPROFIT CORPORATIONS FOR THE PURPOSE OF FINANCING THE ACQUISITION AND CONSTRUCTION OF THE VINTAGE CHATEAU II APARTMENTS WHEREAS', the Association of Bay Area Governments Financing Authority for Nonprofit Corporations (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, Vintage Chateau, L. P_, a California limited partnership, or such other limited liability company or limited_ partnership related thereto or formed by USA Properties Fund, Inc. (the "Borrower ") has requested the Authority to issue and deliver multifamily Housing revenue obligations in the anticipated principal amount of $8,500,000 (the "Obligations "), the proceeds of which may only be used for the purpose of financing the acquisition and construction of a 68 -unit multifamily'residential rental facility to be commonly known as Vintage Chateau 11 and t6be located at 325 North McDowell Blvd. 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 construction of the Project would be considered "qualified exempt facility n bonds '' ri unde r Section 142(a) of the. Internal.Revenue Code of 1976, as amended (the "Code "), and''Secf'on,1.47(f) of the Codd requires that the "applicable elected representative" with respect to the jurisdiction in which.the,Project is located hold a public hearing on the issuance and delivery of thel Obligations; and WHEREAS, the City Council of the City of Petaluma as the "applicable elected representative" to hold said public'hearing, has published, at least 14 days prior to the date hereof in a newspaper of general circulation within the City, notice of, and has held, said public hearing, at which all timely written comments were received and all those interested in speaking with respect to the proposed financing of the Project were heard. M 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, 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, and such adoption shall not obligate (i) the City to provide, -financing to the Borrower for the acquisition, construction and development of the Project or to issue the Obligations for purposes 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 environmental, General Plan, zoning or any other permit or other action necessary for the acquisition, construction, development or operation of the Project. 5:. The City Clerk of the City shall forward a certified copy of this Resolution and a copy of the affidavit of publication of the public hearing notice 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 AbOPTE'D this day of February, 2011 by the following roll call vote: 1'587456.1 1587456.1 5