HomeMy WebLinkAboutItem 1a: Resolution No. 6860 - Multifamily Housing Revenue Bonds for Naomi Gardens.
1f
DATE:
March 5, 2013
TO:
Mayor and City Council
FROM:
Jason Kruckeberg, Assistant City Manager/Development Services Director
By: Jerry Schwartz, Economic Development Manager
SUBJECT:
RESOLUTION NO. 6860 APPROVING THE ISSUANCE BY THE
CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT
AUTHORITY OF MULTIFAMILY HOUSING REVENUE BONDS FOR
NAOMI GARDENS.
Recommendation: Adopt
SUMMARY
The Naomi Gardens senior housing project at 655 West Naomi Avenue is a 101-unit
apartment project for low and very low income seniors. The project was originally
approved by the City Council on January 18, 1983. The project is 30 years old, and the
owners are proposing to take advantage of continued low interest rates to invest in the
property with a complete interior remodel. The project is being funded with 4% tax
credits and tax exempt bonds. The tax exempt bonds are issued per the Tax Equity
and Fiscal Responsibility Act (TEFRA). In order for the bond issue to proceed, Naomi
Gardens has requested to use the City of Arcadia’s bonding capacity to issue the bonds
to finance the improvements. A public hearing is required as part of this process.
BACKGROUND
The financing structure proposed for the Naomi Gardens project was used for the
Heritage Park senior project on Las Tunas Drive, the Campus Commons senior project
on Campus Drive, and the Methodist Hospital expansion project. For those projects,
the development entities used the City’s ability to issue bonds to allow each developer
to issue tax exempt bonds for their projects. Those projects, like Naomi Gardens, are in
the City’s jurisdiction, which make the City the appropriate entity to provide its bonding
capacity. The City Council held a TEFRA public hearing as part of each process. In
these cases, the City is not responsible for the principal and interest payments on the
bonds. In the case of a default, the issuer, not the City, is responsible.
TEFRA Public Hearing/Naomi Gardens
March 5, 2013
Page 2 of 3
DISCUSSION
For Naomi Gardens, up to $13 million in bonds would be issued by the California
Statewide Communities Development Authority (“CSCDA”). CSCDA is organized
through a joint powers agreement, with the City of Arcadia being one of the more than
480 cities, counties, and special districts in California that is a Program Participant.
CSCDA is authorized by its joint powers agreement to issue bonds in order to promote
economic development, including the provision of multiple family housing. Under its
agreement, CSCDA can only approve the financing for a project after the governing
body of the Program Participant where the project will be located approves the
proposed financing.
If approved by the City to proceed, the developers apply to CSCDA for the bond
allocation. The bonds would be repaid by the project. The City would not be
responsible for any principal or interest payments on the bonds. Once the City
authorizes the issuance of the tax exempt bonds, its role in the process will be
complete.
This TEFRA hearing is required to be noticed at least 14 days prior to the hearing date.
The notice was published in the Arcadia Weekly on February 14, 2013. The
rehabilitation will require the submission of improvement plans, the completion of plan
check, and the issuance of a building permit, all of which will be completed by the
Development Services Department.
CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA)
Consideration of approving the issuance of tax exempt bonds for the Naomi Gardens
project is exempt from CEQA because it is not considered a project per Section
15061(b)(3) of the guidelines. The Naomi Gardens project had its Environmental
Impact Report, Mitigation Measures, and Statement of Overriding Considerations
approved by the City Council at its meetings of December 21, 1982, and January 18,
1983.
FISCAL IMPACT
There is no fiscal impact from the approval of the tax exempt bonds. The bonds will not
be included in on the City’s books or on future City audits. The proposed issue will not
impact either the City’s bonding capacity or the City’s bond rating. Principal and interest
payments are the responsibility of the issuer, not the City. The City of Arcadia is not
providing any future support for this bond issue.
TEFRA Public Hearing/Naomi Gardens
March 5, 2013
Page 3 of 3
RECOMMENDATION
It is recommended that the City Council adopt Resolution No. 6860 approving the
issuance by The California Statewide Communities Development Authority of
Multifamily Housing Revenue Bonds for Naomi Gardens.
Attachment: Resolution No. 6860