Loading...
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