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HomeMy WebLinkAboutStaff Report 5.A 12/02/2019DATE TO: Agenda Item #5.A December 2, 2019 Honorable Mayor and Members of the City Council through City Manager,-� Sue Castellucci, Housing Administrator SUBJECT: Resolution of the City Council of the City of Petaluma Approving the Issuance of Revenue Bonds by the California Municipal Finance Authority in an Aggregate Principal Amount not to Exceed $25,000,000 for the Purpose of Financing the Acquisition and Construction of River City Senior Apartments RECOMMENDATION It is recommended that the City Council adopt the attached Resolution of the City Council of the City of Petaluma Approving the Issuance of Revenue Bonds by the California Municipal Finance Authority in an Aggregate Principal Amount not to Exceed $25,000,000 for the Purpose of Financing the Acquisition and Construction of River City Senior Apartments BACKGROUND The River City Senior Apartments is the new construction of a 54 -unit affordable senior multifamily housing project located at 951 Petaluma Blvd, Petaluma, CA. The existing building will be demolished and (3) two- and three-story buildings will be constructed. On-site amenities include a dog run and a two-story community building with community room, outdoor barbecue, office, highspeed internet and wellness center. The northern portion of the site adjacent to the Petaluma River will be developed with a community path and patio area. PEP Housing will construct a bicycle and pedestrian trail on City -owned land adjacent to the eastern boundary of the property connecting existing and planned access trail segments on the properties adjacent to the property and to the existing dock on the Petaluma River. The trail will be constructed in accordance with the specifications provided by the City of Petaluma including installation of fencing and gates. The project will be Green Certified. A transit stop is located at the front of the property on Petaluma Blvd. South. The project will be affordable to low-income seniors and senior veterans aged 62 years and older. To further serve the senior population, the project will incorporate a wellness center where healthcare professionals and community members can provide health and community services necessary for seniors to age in place. The financing of this project will result in the creation of affordable housing for low-income senior households in the City of Petaluma for 55 years. The income of the residents who will be living in the community will be between 30%-50% of the Area Median Income for Sonoma County. The development and support of low-income housing is one of the highest priorities of the City's 2015-2023 Housing Element, and 2015-2020 Consolidated Plan. DISCUSSION The recommended action is necessary to complete the financing plan which will allow start of the construction of River City Senior Apartments. PEP Housing is recommending a financial strategy similar to that utilized in financing many of their previously approved, affordable housing projects that utilized tax-exempt bonds. PEP Housing has just submitted their application to the California Tax Credit Allocation Committee to secure 4% state tax credits and by adopting this resolution, they can begin to secure the tax-exempt bonds necessary for the tax credits. PEP Housing 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. 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 for construction of the affordable units. 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 Reforin 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 obligation 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. PUBLIC OUTREACH A public notice was published in the Argus Courier on November 21, 2019 announcing a public hearing to be held with respect to the proposed issuance by the California Municipal Finance Authority of its revenue bonds not to exceed $25,000,000. The proceeds of the Bonds will be used to finance construction of the River City Senior Apartments, a 53 -unit affordable housing development. FINANCIAL IMPACTS 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 I 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 PEP Housing or its affiliate. In the financing documents the developer will also provide comprehensive indemnification to CMFA and its members, including the City. ATTACHMENTS Resolution ATTACHMENT #1 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PETALUMA APPROVING THE ISSUANCE OF REVENUE BONDS BY THE CALIFORNIA MUNICIPAL FINANCE AUTHORITY IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $25,000,000 FOR THE PURPOSE OF FINANCING THE ACQUISITION AND CONSTRUCTION OF RIVER CITY SENIOR APARTMENTS WHEREAS, Petaluma Ecumenical Properties, a California nonprofit corporation doing business as PEP Housing (the "Sponsor"), on behalf of River City Senior Apartments, L.P., a California limited partnership, or another entity to be created by the Sponsor or an affiliate of the Sponsor for the purpose of owning the facilities described herein (such limited partnership or other entity, the "Borrower"), has requested that the California Municipal Finance Authority (the "Authority") issue one or more series of revenue bonds in an aggregate principal amount not to exceed $25,000,000, including but not limited to revenue bonds issued as part of a plan to finance the development described herein (the "Bonds"), for the acquisition, development, and construction of a 54 -unit affordable rental housing facility for low-income seniors, including senior veterans and seniors experiencing homelessness (the "Project"), to be located in the City of Petaluma, California (the "City") at 951 Petaluma Blvd. S. and to be owned and operated by the Borrower; and WHEREAS, pursuant to Section 147(f) of the Internal Revenue Code of 1986 (the "Code"), the issuance of the Bonds by the Authority must be approved by the City because the Project is to be located within the territorial limits of the City; and WHEREAS, the City Council of the City (the "City Council") is the elected legislative body of the City and is one of the "applicable elected representatives" required to approve the issuance of the Bonds under Section 147(1) of the Code; and WHEREAS, the Authority has requested that the City Council approve the issuance of the Bonds by the Authority in order to satisfy the public approval requirement of Section 147(f) of the Code and the requirements of Section 4 of the Joint Exercise of Powers Agreement Relating to the California Municipal Finance Authority, dated as of January 1, 2004 (the "Agreement"), among certain local agencies, including the City; and WHEREAS, pursuant to Section 147(f) of the Code, the City Council has, following notice duly given, held a public hearing regarding the issuance of the Bonds, and now desires to approve the issuance of the Bonds by the Authority; NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Petaluma, as follows: Section 1. The foregoing recitals are true and correct. Section 2. The City Council hereby approves the issuance of the Bonds by the Authority, including but not limited to Bonds issued as part of a plan to finance the facilities described herein. It is the purpose and intent of the City Council that this resolution constitute approval of the issuance of the Bonds by the Authority, for the purposes of (a) Section 147(f) of the Code by 11 the applicable elected representative of the governmental unit having jurisdiction over the area in which the Project is to be located, in accordance with said Section 147(f) and (b) Section 4 of the Agreement. Section 3. The officers of the City are hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents which they deem necessary or advisable in order to carry out, give effect to and comply with the terms and intent of this resolution and the financing transaction approved hereby. Section 4. The Clerk shall forward a certified copy of this Resolution and an originally executed Agreement to the Authority in care of its counsel: Ronald E. Lee, Esq. Jones Hall, APLC 475 Sansome Street, Suite 1700 San Francisco, CA 94111 Section 5. This resolution shall take effect immediately upon its adoption.