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HomeMy WebLinkAboutAgenda Bill 5.A 04/07/20034 1'4� CITY OF PETALUMA, CALIFORNIA 5A AGENDA ILL APR-7 Agenda Title Resolution Authorizing An Application To The Meeting Date: April 7",2003 California Debt Limit Allocation Committee To Permit The ' Issuance Of Qualified Residential Rental Project Bonds And Declaration Of Official, Intent To Reimburse Certain Expenditures Meeting Time X 3 :00 PM From Proceeds Of Iridebtedness. ❑ 7:00 PM Category (ch'eck one) ❑ Consent Calendar ❑ Public Hearing X New Business ❑ Unfinished Business ❑ Presentation Department Director Contact Person Phone Number Finance/Housing Bill Thomas Bonne GaeblL 778 -4484 (direct line) Cost of Proposal $1,000 (estimated staff time and mate''als) Account Number 211/5465 Amount Budgeted :The developer, Eden Housing, will pay ,,a Name of Fund: deposit of .50% ($55,000) plus financing and administrative fees; to Downtown River Apts. the City Attachments to. Age_ nda Packet:Item 1. Draft Resolution 2. Location Map 3. Project Financing Summary 4. Deposit Agreement Summary. Statement Eden Housing Inc. is the not- for,- profit developer of the proposed development, the Downtown River Apts., an 81 -unit multi - family rental apartment complex located at '3 through 39 East Washington Boulevard. Eden is requesting the issuance by the City of its tax - exempt multi- family housing revenue bonds in an amount not to exceed $11,500;000, the proceeds of which would be used by Eden Housing for the purpose of acquiring and constructing the apartments. All prospective bond financed projects must have a resolution expressing the intent bf'the legislative bodylo issue tax. exempt bonds which will be used to pay project costs. From the. time the, resolution is adopted, costs related to the project can be funded through the bond issuance. The ,adoption of such a resolution does not obligate the City to issue the bonds. Recommended City Council- Aetion/Suuested Motion Adopt Resolution Authorizing An Application To The Califomia Debt Limit Allocation Committee To Permit The Issuance Of Qualified Residential Rental Project Bonds And Declaration Of Official Intent To Reimburse Certain Expenditures From Proceeds Of Indebtedness. Reviewed by Finance Director: Rev ewed.b _ Cit Attorne : Appr ove Cite Date: Today's Date Revision #,and Date evised: File Code: #' Edenfinance I. CITY - OF PETALUMA, CALIFORNIA APRIL 7, 2003 • AGENDA ]REPORT FOR RESOLUTION AUTHORIZING AN APPLICATION TO THE CALIFORNIA DEBT LIMIT ALLOCATION COMMITTEE 70 PERMIT THE ISSUANCE OF QUALIFIED RESIDENTIAL RENTAL PROJECT BONDS AND DECLARATION 'OF'OFFICIAL INTENT TO REIMBURSE CERTAIN EXPENDITURE$; FROM PROCEEDS OF INDEBTEDNESS. 1. EXECUTIVE SUMMARY Eden Housing Inc. is the not - for - profit developer of the proposed development, the Downtown River Apts., an 81 -unit "multi - family rental apartment complex located at 3 through 39 East Washington Boulevard. Eden is requesting the issuance by the City of its tax - exempt multi- family housing revenue bondsman amount not to excee431.1 500 0' proceeds of which would be used by Eden Housing for the purpose of acquiring and constructing the apartments. All prospective tive bond financed projects must have a resolution expressing the intent of the body to issue tax exempt bonds which will be used to pay project costs. From the time the resolution is adopted, costs related to the project can be funded through the bond issuance. The adoption of such a resolution does not obligate the City to issue the bonds. The City has provided tax - exempt bond - related assistance to the following affordable housing communities: Park Lane Apartments: 90 units of family and senior rentals Vintage Sunrise Chateau: 244 units of lowsin o senior housing for seniors (15 very -low income units) g housing O hese bonds are also known as "conduit" or "private activity" bonds and are expressly allowed under Federal and State laws to assist in the development of low income housing units. The bonds are subject to. a State of California allocation of private activity and bond authority which is issued by the California Debt Limit Allocation Committee ( CDLAC). The application to CDLAC for the first round of bond activity for 2003 is April 16. The City will be reimbursed for all costs associated with this bond issue.. The bonds would be privately placed first Wells Fargo during; construction and then ' old to the California Community Reinvestment Corporation to be: held permanently for the duration of the 30 -year term. These are multi - family housing revenue bonds payable solely fi-om residential and commercial income from the project. 2. BACKGROUND For the past thirty plus years, Eden Housing has provided affordable housing in the Bay Area, with close to 4,200 residential - units and 39,000 square ;feet of commercial space in cities throughout Alameda, Santa Clara, Sonoma, Contra,Costa and San Joaquin counties. In Petaluma, Eden has developed and manages two rental communities for low and moderate income Petalumans (Washington Creek Apts. and Corona Ranch Apts:) and one!,homeownership community (Corona. Crescent), for first time homebuyers. Most of Eden's developments also provide on -site services, which include childcare , after - school programs, and job - training. The Downtown River Apartments will contain the following elements: 0 81 units of housing including one manager's unit 0 3,000 square foot. Community Center with computer learning lab 0 3,500,square feet of commercial. space • 0 2 play yards and one basketball court 0 walking path along „the Petaluma river Currently the rents are proposed at 50 -60 %% of Petaluma's Area Median Income (AMI) which translates into rents' for .l -3 bedroom units ranging from $616 to $$1,000 per month. The term of affordability will run for at 24 least the term of the bonds and the City places rent restrictions on both our Low -Mod funds and our HOME funds invested in the project. 3. ALTERNATIVES 'Eden has explored several different bond purchaser and issuer options for this project in order to determine, which would be most beneficial: 0 • Ca1HFA: Historically, California Housing Finance Agency (CalHFA, once named•CHFA) was approached first because historically, their rates were unbeatable. However, that agency now has 'onerous insurance, architectural and design standards which would add considerable: cost to the project. • California Statewide Community Development Authority(CSCDA): The - upfront, and ongoing fees are onerous. • Association of Bay Area Governments (IABAG). While ABAG's fees are more in line with other public issuers, there have been problems in the past with meeting required deadlines. ® Sonoma County: The County refers all multifamily bond issues to above - referenced agencies. FINANCIAL IMPACTS The total amount anticipated for the issuance of the tax- exernpt bonds is $11,500,000. The City will serve only as a conduit for the financing of the bonds, but the obligation for payment of the. bonds will be the responsibility of Eden Housing, Inc. using the rent proceeds, from the pro,ect. Iii the event of a default on the proj ect, the property becomes the security for the "bonds, and, there is no liability Io the City. As outlined in the Depos>t Agreement, a docurrierit which will be executed between 'the. City and Eden Housing, "the,developer shall be responsible for. all present and future costs in connection with the issuance of the Bonds, including,, but•not limited to, any fees and expenses incurred by the City in anticipation of the`issuaftcO of the Bonds, the City's 'financing fee, with respect to the issuance of the Bonds, the City's annual administration fee with respect to administering iheprovisions 'of the regulatory agreement, the cost of printing, any official document rating agency costs, trustee fees and expense, and the cost of printing the Bonds'." (Exhibit 4) The annual administrative fee will become a General Fund resource. 5. CONCLUSION The next step will be to hold a.public hearing on.May 5 in accordance with the Federal Tax Equity and Fiscal Responsibility Act ( TEFRA) of 1986 to take public testimony and to adopt ,a ,Resolution Approving the Issuance bythe Cityof Petaluma of Bonds Relating to the Downtown River'Apartments project. 6. OUTCOMES' OR PERFORMANCE MEASUREMENTS THAT WILL IDENTIFY SUCCESS OR COMPLETION: • Eden Housing will close construction /Bond financing Sept. 5, 2003 ® Start Construction Sept. 10 ® Resident Marketing July 2004- November 20104 ® Complete Construction November 10, 2004 • Occupancy November 17, 2004 7. REWMMENDATION Adopt the attached resolution and schedule a TEFRA Hearing for the May 5, 20013 City Council agenda. g: /forms /2003 agenda bil l 3. 1 f)� . S� Exhibit 1. RESOLUTION NO. RESOLUTION AUTHORIZING AN APPLICATION TO THE CALIFORNIA DEBT LIMIT ALLOCATION COMMITTEE TO PERMIT THE ISSUANCE OF QUALIFIED RESIDENTIAL RENTAL PROJECT BONDS AND DECLARATION OF OFFICIAL INTENT TO REIMBURSE CERTAIN EXPENDITURES FROM PROCEEDS OF INDEBTEDNESS WHEREAS, the City of Petaluma (the "City ") desires to, engage in a program (the "program ") of financing the acquisition and construction of a multifamily rental `housing development; WHEREAS, Eden Housing Inc., a California not-for -profit corporation (the "Borrower ") (together with its successor or assigns"' or Any partnership or limited liability company of which it --or an affiliate is a partner or a member), has made a request to the City for assistance with respect to the financing of the acquisition and construction of the Downtown River Apartments, an 81 unit multi - family rental apartment project located at 3 through 39 East Washington Boulevard, in Petaluma, California 94953 (the "Project "); WHEREAS, the assistance requested is the issuance by the City of its tax - exempt multi - family housing revenue bonds (the `Bonds ") in an amount not to exceed $11,500,000 the proceeds of which would be used by the Borrower or by an entity created by the Borrower for the purpose of acquiring and constructing the Project; WHEREAS, the ` Borrower expects to pay certain expenditures (the "Reimbursement Expenditure ") in connection with the Project prior to the issuance of the Bonds for the purpose of financing costs associated with the Project on a long term basis; WHEREAS, Section 1._103- 8(a)(5) and Section 1..150 -2 of the Treasury Regulations require the City to declare its reasonable official intent to reimburse prior expenditures for the Project with proceeds of a subsequent borrowing; WHEREAS, the Internal Revenue Code of 1986 and the applicable regulations thereunder require the Borrower to take this action in connection with the payment of certain expenses in connection with the Project prior: to issuance of tax- exempt bonds in order to allow the Borrower to be reimbursed for such expenditures; WHEREAS, Chapter 11.8 of Division 1. of Title 2 of -the Government Code of the State , of California,govems the allocation in the State of California of the state ceiling • established by Section 146 of the Code among governmental units in the State having the authority to issue private activity bonds; is WHEREAS, Section 8869.85 of the Government Code requires a local agency to file an application 'for a portion of the state ceiling with or upon. the direction of the California Debt Limit Allocation Committee ( "CDLAC ") prior to the issuance of private activity bonds; and WHEREAS, CDLAC procedures require an applicant for a portion of the state ceiling to certify to CDLAC that the applicant has on deposit an amount equal to one -half percent (0.5 %) of the amount of allocation requested (not to exceed the maximum provided in,siichprocedures); NOW, THEREFORE, BE IT RESOLVED, as follows: 1. The statements contained in this .Resolution with respect to the reimbursement. of the expenditure described in this Resolution are intended to be the statements of official .intent as required by and in conformance with, the provisions of Treasury Regulations Section 1.150 -2(e). 2. The expenditures to be' reimbursed pursuant to this resolution have been incurred within .60- days prior to the"date hereof or will be incurred after the date hereof in .connection with the acquisition and construction- by the Borrower of the Project. 3. The maximum rinci al amount of debt expected to p p p. be issued for the Project is $11,500,000: 4. The Borrower reasonably expects to reimburse the expenditures :set forth . in this resolution with the proceeds of tax- exempt debt to be issued by the Issuer subsequent to the date�hereof, but this Resolution d'oes''not constitute a.binding obligation to issue such debt. 5`. The City Manager and the Finance Director, each acting alone, are hereby authorized to submit an application to CDLAC for an allocation of a portion, of the state ceiling '(as that. term is used in the California Government Code) in an amount not to exceed $11,500;000 for application toward the issuance of the Bonds by the City to finance the Project. All actions heretofore taken, by the City Manager or the Finance, Director in connection with the fling of an. application with. CDLAC are hereby approved and ratifie. The City Manager or the Finance Director, with the advice of legal counsel, is hereby authorized, on behalf of the City, to submit all ,such other documents as may be required to CDLAC. pursuant to Government Code Section 8869.85 in furtherance of the: application. The City Manager or the Finance Director are each hereby authorized to assigned any allocation of a portion of the state ceiling received. from CDLAC to any other entity eligible to issue the Bonds, including a joint powers authority of which the City is a member. • 51 6. An amount equal to one -half of one percent of the amount of allocation • requested (not to exceed any maximum deposit pursuant to CDLAC guidelines), to be provided by the 'Borrower, is hereby authorized to be placed into an escrow account, and the City Manager or the. Finance Director or the designee of either, is authorized to execute an Escrow Deposit Agreement, or other. ,agreement as may be required with respect to such deposit, and to certify to CDLAC that such funds are available. 7. This Resolution shall take effect immediately upon its passage and adoption. Inducementreso /d rI I EXHIBIT 2 732 725 734 \ 1' 722 7 2;E� P722 1 717 E 17 2 72 722 712 709 718 1717 1 1712 705 705 70, 1 ' 710 7C 73 71 --1 0 7� 78! LOCATION M L r V L1110 STRE 63C )WN RIVER ROW APARTMENTS - SAN 1151 1 62111 IL'a- -777717--T-L4 A.NTOt\ .Washington Street .21-00 007, 008 009, 010 01,1 013 a�1 � z 5110 516 I I I 1 51 �� < [41 7 413.3 127 421 415 L_7)07 408 419 41.17 INL 405 n. n 410 - 4 — Osj IN 7, WCNEAR CHANS, C j tj VrIt 500 J) n ✓7, WILSON STREET C C43 8 408 419 41.17 INL 405 n. n 410 - 4 — Osj IN 7, WCNEAR CHANS, C j tj VrIt ai EXHIBIT 3 a • • Downtown River Apartments Petaluma, CA FINANCING SUMMARY Eden Housing, Inc. 409 Jackson Street Hayward, CA 94544 (510) 582 -1460 3/26 003 \Financing Summary 3.25- 03.xis 4 % Tax Credits /Tax Exempt Devel opment, Summary Total°Nurrber of.Units 81 Acres 2 Density: Units per Acre 35 Total Unit Square Footage 144,910 Total Community Space Square Footage 3,000 Affordability: Mix Very Low Income Units @ 45% AMI 0 Very Low Income Units @-50% AMI 25 Low Income Units @ 60 % AMI 55 Managers Unit 1 Total 81 Unit Mix 1 BR/1 BA 8 2 BR/1 BA (incl. Manager's unit) 49 3 BR/2 BA 24 Total 81 Development Budget Acquisition $990,000 Architectural & Engineering $1,007,369 Construction'Costs $13,964,478 Soft Costs $2,704,235 Financing &'Carrying Costs $836,978 Tax Credit Syndication,Expenses $142,079 Total Development Costs $19,645,139 Total Construction Cost per Unit $172 Permanent Fi'nancin� City Financing $3,662,835 L.P. Tax'Credit Equity Contribution $6,824,318 General Partner Contribution $0 HOME $3,400,000 Permanent Financing (tax exemptbonds) $5,757,986 GAP $0 Total Sources of Funds $19,645,139 Summary of Operations Gross Income After Vacancy (Year 1) $840,494 Annual Operatirf2 &Reserves $379,306 Net Opera fing Income, $461 Debt Service $401,033 Net Cash Flow $60,155 Eden Housing, Inc. 409 Jackson Street Hayward, CA 94544 (510) 582 -1460 3/26 003 \Financing Summary 3.25- 03.xis EXHIBIT 4. DEPOSIT AGREEMENT This Deposit Agreement (the "Agreement"), by and between the City of Petaluma (the "City "), and the entity .listed as. the devel - oper in Schedule A attached hereto and by this reference incorporated.herein (the "Developer "), WITNESSETH: WHEREAS, the Developer has requested that the City obtain an allocation from the State of California to issue multifamily housing revenue bonds (the " Bonds "), the 'interest on which would be excluded from gross income for federal income tax ur. oses. to assist in the financing of the project described in Schedule A (the "Project "); and p P WHEREAS, the Bonds are characterized as "Private Activity Bonds" under applicable sections of and are subject to the volume limitations contained in Section 146 of the Internal Revenue Code.of 1986,,as amended (the "Tax Code "); and • WHEREAS, pursuant to Section. 8869.80, et seq., of the'California Government; Code (the "Code"), the California Debt Limit Allocation Committee ( "CDLAC ") has been allocated the entire amount specified by Section 146(d) of the Tax Code for the State of California (the "Volume Limit ") for 2003; and • WHEREAS; CDLAC has established procedures to be followed by local, agencies in California to obtain a portion of the Volume Limit for specific financings sand. WHEREAS, such procedures require that, in order to obtain a portion of the, Volume Limit .for the fi.nancing:for the benefit of the Developer described in Schedule A, in addition to other requirements, the City must collect.from the Developer and hold cash or a letter of credit in an escrow account specifically established for such purpose art amount equal to one -half of one percent (.50 %) of the principal amount of Bonds expected to be issued' (not to exceed $100,000); and WHEREAS, the has agreed to deposit with the City the amount required by CDLAC; and WHEREAS, the City and the Developer desire to set forth the terrns' and conditions under which said .cash or'letter of credit, as applicable will be held in escrow by the City; NOW, THEREFORE in consideration of the premises and for other consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby agree as follows: Section 1. `Deposit and ,Escrow Account; Initial Application Fee. By its execution ,of this .Agreement, the City acknowledges receipt of cash in an amount equal to; one -half of orie percent (.50 %) of the principal amount of Bonds shown in Schedule. A (the 'Cash Deposit "), or, in the alternative, the Letter of Credit from the Developer; in the form of a standby letter of q... r credit naming as the bieneficiary CDLAC (the "Letter of Credit"), in an amount equal to one -half of one • percen (.50 %) of the principal amount of Bonds shown in Schedule A (the "Letter of ) g with a cashier's check in the amount of $300 made out to California Debt Limit Allocation Committee (the "Initial Application Fee "). The Cash Deposit shall be applied, or, in the alternative, the Letter.of Credit shall be held and drawn upon, solely in accordance with the terms of the Letter of Credit, this Agreement, the Code, the procedures of CDLAC and the laws of the State of California. The Initial Application Fee shall be forwarded to CDLAC along with the application of the City to CDLAC for a portion of the Volume Limit for the Project, and shall be nonrefundable in any event. The Developer shall not be entitled to receive any interest from any investment of the Cash Deposit, and all such interest shall be retained by the City. Section 2. Disposition of -the Cash Deposit or the Letter of Credit. The Cash Deposit or the Letter of Credit, as applicable, shall -be disposed of',as follows: (A) If (i) the De_ veloper directs the City to withdraw the request to CDLAC for allocation of a portion of the Volume Limit for the Project prior to any action taken by CDLAC thereon, or (u) the Project fails to receive any portion of the Volume Limit during the second allocation round of 2003 (or such later date as may be mutually agreed to by the City and the Developer), the City shall, promptly upon receiving confirmation thereof and written perrission. from CDLAC to release the Cash Deposit or Letter of Credit, ' as applicable, return the Cash Deposit or Letter of Credit, as applicable, to the Developer. . (B) If the Project receives a portion of the Volume Limit during the second allocation round of 2003 (or such later date as may be mutually agreed to by the City and the Developer) in an amount:. less than the principal amount of Bonds requested, a pro rata portion of the Cash Deposit or the Letter. of Credit, as applicable, promptly may be, upon receipt of written notification thereof from CDLAC and written permission to release a proportionate amount of the Cash Deposit or the Letter of Credit, and if a Letter of Credit is held by the City replaced by a substitute letter of credit substantially in the form of the Letter of Credit in, or reduced to, ,an amount equal to one -half of one percent .(:50 %) of the principal amount of Bonds for which a portion of the Volume Limit has been allocated for the Project subject to paragraph 2(C) below. If the Project receives a portion of the Volume Limit in an. amount equal to the principal amount of Bonds requested, the entire Cash Deposit or Letter of Credit, as 'applicable, shall be retained by the City, subject to paragraph 2(C) below. •(C) Any portion of the Cash Deposit, or the Letter of Credit, or the substitute Letter of Credit, as, applicable, retained. by the City pursuant to paragraph 2(B) shall be disposed of as follows: (i) If the Bonds are issued by the City in an amount Iess than 80% (or such other percentage as is set forth in CDLAC's rules and procedures) of the allocation awarded for the Project, the Cash Deposit or the .Letter of Credit, as applicable, may be reduced by the Developer upon written permission of CDLAC in an amount equal to the product of (1) the original amount of the Cash J,�b. a Deposit or the Letter of Credit, as applicable, times (2) the ratio between the • amount of Bonds issued divided by the amount of Volume'Limit received. The balance of the Cash Deposit or, if applicable, the .Letter of Credit shall be drawn upon in full by the City and the Cash Deposit or the proceeds of such .draw, as applicable, shall be disposed of in accordance with the rules promulgated by CDLAC as they pertain to the Cash Deposit or, if applicable, the ,proceeds of the Letter of Credit. (ii) If no Bonds are issued prior to the expiration of the Volume Limit allocation, the Cash Deposit, or, if applicable, Letter of` Credit shall be drawn with the rules nd b. CDLAC draw, s they be disposed of in accordance p proceeds promulgated y y p the Cash Deposit or, if applicable, the proceeds of the Letter of Credit. (iii) Notwithstanding the above, all or a portion of -the Cash Deposit or the Letter,of Credit, as applicable, which otherwise would be drawn upon under subparagraph (i) . or. (ii) above may be released if the City receives written notification or confirmation from CDLAC that such release may be made without liability on the part of the City. Section 3: Volume Limit. The ,Developer understands' that if the Project receives a portion of the Volume Limit,- such allocation will be .subject to the Code and any rules promulgated by CDLAC pertaining to the allocation of the Volume Limit. The Developer further understands that any Volume Limit allocated to the Project by CDLAC' will expire on a certain date, and if Bonds have not been- issued by such expiration_ date, the Letter of Credit, if applicable, will be drawn upon as provided in the procedures of CDLAC. Section 4.. Issuance. of Bonds. The Developer understands that the�execution of this Agreement nor the.acceptance of the Cash Deposit or the Letter of Credit, as, applicable, by the. City and application to. CDLAC for an allocation of the Volume Limit for ,the Project; by the City, in any way.'obligates the City to issue the Bonds; said issuance being expressly contingent upon the negotiation and approval by `the City of documentation for the financing:acceptable to it in its sole discretion. The City intends to cooperate with the Developer in issuing the Bonds, but is in no way obligated to effect said issuance on terms other than as are fully acceptable to the City. Section 5., Payment , of Expenses. The Developer shall be responsible for the payment of all present and future costs in connection with the issuance .of the Bonds, including, but not limited to, any fees and :expenses incurred by the City in anticipation of the issuance of the Bonds, the City's financing fee with respect to the issuance of the Bonds, the City's annual administration fee with respect to administering the provisions of a regulatory agreement with respect to the Project, the cost of printing any official statement, rating agency costs, bond counsel fees and expenses, under - writing discount and costs, trustee fees and expense, and the costs of printing, -the Bonds: The payment of the principal, redemption premium, if any, and purchase price of and interest on the Bonds shall be solely the responsibility of the Developer. The Bonds: shall not constitute a debt or obligation of the City. " r t Section 6. City Not Liable. Notwithstanding any breach of the terms of this Agreement by the City or the occurrence of any other event, .in no event shall the City be liable to the Developer hereunder for any amount in excess of that portion of the Cash Deposit or the Letter of Credit, as applicable, to be released to `or reduced by the Developer under the terms of Section 2 hereof. Section 7. No Estoppel. This Agreement shall not create any estoppel of the Developer with respect to any claim or right which the Developer may have against CDLAC with respect to any release or reduction of.the Cash Deposit or the Letter of Credit, as applicable. Section 8. Assignment. The Developer shall,.have no right, to assign this Agreement or the benefits hereof to any other entity. Subject to the provisions of the Code and any regulations of CDLAC, the City may assign this Agreement to another City qualified to issue the Bonds. Section 9. Counterparts. This Agreement may be :signed in counterparts with the same effect as if the signatures thereto were upon the same instrument. 1Z:. IN WITNESS WHEREOF the part es'hereto have executed this Agreement,as of the date • set forth alongside of their signatures below. CITY OF PETALUMA (the "City") Date of- Execution'by the City By April 2003 Finance Director 4 EDEN HOUSING, INC., a. California not- for- profit corporation (the "Developer ") Date of Execution by the Developer: $ April _, 2003 Its: 0 0 /�g