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HomeMy WebLinkAboutStaff Report 5.A 02/06/2012 Ag-eta'/teww#5.A • \Z_g fl DATE: February 6, 2012 TO: Honorable Mayor and Members of the City Council through City Manager FROM: Bonne Gaebler,-Housing AdministraA SUBJECT: Resolution Of The City Of Petaluma CityCouncil Approving The Issuance Of Multifamily Housing Revenue Bonds For The Purpose Of Financing The Acquisition And Construction Of Kellgren Senior Apartments. RECOMMENDATION It is.recommended that the City Council adopt the attached Resolution approving The Issuance of Multifamily Housing Revenue Bonds for the Purpose of Financing the Acquisition and Construction of Kellgren Senior Apartments. BACKGROUND Kellgren Senior Apartments is an approved 50-unit affordablesenior housing rental apartment community. The property.address is 855 Wood Sorrel Drive, and the developer is Petaluma Ecumenical Properties(PEP'Housing). The City allocated a total of$1,387,453 to the project for site acquisition and pre-development expenses. ALl allocations are from Housing Funds and have no impact on the General Fund. The development and support of low-income senior housing is one of the highest priorities of the City's 2014 Housing.Element, 2015 Consolidated Plan, and 2012 PCDC Implementation Plan. DISCUSSION The recommended action is necessary to.complete the financing plan to allow start of construction of Kellgren Senior Apartments in fall of 2012. PEP Housing is recommending a financial strategy similar to that utilized in financing the recently approved, Logan Place apartments. Permanent financing includes PCDC low-mod funds ($1,387,453); HUD Section 202 ($6,257,700); tax creditequity ($5,283,268); Federal Home Loan Bank Affordable Housing Program, (AHP) loan($490,000); deferred developer fee($126,619); and, developer equity ($264,820) for a total project cost of$13,809,860. 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 Agreement since January 2007. There are a series of actions;necessary to accomplish this transaction: Agenda Review: City Attorney 1 J( Finance Director City Manager (1) The Internal Revenue Code of 1986 requires that the City.Council conduct a public hearing known as a TEFRA hearing (Tax Equity Fiscal ReforiiiAet) 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 1. Resolution Kellgren senior TEFRA Hearing DRAFT Petaluma staff report and resolution 2/6/12 ATTACHMENT #1 RESOLUTION NO. 2 CITY OF PETALUMA RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PETALUMA APPROVING THE ISSUANCE OF TAX-EXEMPT BONDS BY THE CALIFORNIA MUNICIPAL FINANCE AUTHORITY FORA LIMITED PARTNERSHIP TO BE ESTABLISHED BY PETALUMA ECUMENICAL PROPERTIES OR AN AFFILIATE OF PETAL UMAECUMENICAL PROPERTIES WITH RESPECT TO A MULTIFAMILY APARTMENT PROJECT WHEREAS, a limited partnership to be established by Petaluma Ecumenical Properties, or an affiliate thereof(the "Borrower") intends to acquire and construction a 50-unit multifamily housing development known as Kellgren Senior Apartments, located at 855 Wood Sorrel Drive in the City of Petaluma, California(the "Project"), and has requested the California Municipal Finance Authority (the"Authority") to issue tax-exempt bonds (the "Bonds") in the not-to- exceed principal amount of Twelve Million Five Hundred Thousand Dollars ($12,500,000), the proceeds of which shall be used for the purpose of financing the acquisition and construction of the Project; and WHEREAS, Section 147(f) of the Internal Revenue Code of 1986, as amended (the "Code") requires that the "applicable,elected representative" with respect to the Project to approve the issuance of the Bonds with respect to the Project after a public hearing has been held concerning the issuance and delivery of the Bonds with respect to the Project; and WHEREAS, the City Council of the City of Petaluma (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 1470) 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(1)of the Code.and the requirements of Section 4 of the Joint Exercise of Powers Agreement, 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 at which all those interested in speaking with respect to the financing of the Project were heard,and now desires to approve the issuance of the Bonds by the Authority, as provided below; NOW, THEREFORE, be it resolved by the City Council of the City of Petaluma, as follows: 3 1. The City Council hereby finds and determines that the foregoing recitals are true and correct. 2. The City Council hereby approves the issuance of the Bonds with respect to the Project by the Authority. It is the purpose and intent of the City Council that this resolution constitute approval of the issuance of the Bonds by the Authority only for the purposes of(i) Section 147(1) of the Code by the applicable elected representative of the governmental unit having jurisdiction over the area in which the Project will be located, in accordance with said Section 147(f), and (ii) Section 4 of the Agreement. 3. The issuance and delivery of the Bonds 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 Bonds by the Authority. 4. The payment of the principal, prepayment premium, if any,and purchase price of and interest on the Bonds shall be solely the responsibility of the Borrower. The Bonds shall not constitute a debt or obligation of the City. 5. 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. THE FOREGOING RESOLUTION is approved and adopted by the City Council of the City of Petaluma this day of , 2012, by the following vote: AYES: NOES: ABSENT: 4 ABSTAINING: Mayor ATTEST: City Clerk 5