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HomeMy WebLinkAboutItem 1a: Tax Equity & Fiscal Responsibility Act (TEFRA) Hearing to Issue $9 million in Bonds for Campus Commons Senior HousingBACKGROUND DISCUSSION STAFF REPORT Development Services Department DATE: August 17, 2010 TO: Mayor and City Council FROM: Jason Kruckeberg, Assistant City Manager /Development Services Director By: Jerry Schwartz, Economic Development Manager .'4S SUBJECT: RESOLUTION NO. 6738 TO GRANT THE AUTHORITY TO ARCADIA CAMPUS COMMONS ASSOCIATES TO ISSUE UP TO $9 MILLION IN MULTIPLE HOUSING REVENUE BONDS AS PART OF THE FINANCING FOR THE CAMPUS COMMONS SENIOR HOUSING PROJECT AT 16 CAMPUS DRIVE PURSUANT TO THE TAX EQUITY AND FISCAL RESPONSIBILITY ACT (TEFRA) RECOMMENDATION: APPROVE RESOLUTION NO. 6738 The Campus Commons senior housing project at 16 Campus Drive is a 43 -unit apartment project for low and very low income seniors. It is being funded with tax credits, a long term loan from the Redevelopment Agency (the form of which is still to be considered by the Agency), 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, the City needs to act as a conduit for the financing. A public hearing is required as part of this process. The financing structure for the Campus Commons project is the same one that was used for the Heritage Park senior project on Las Tunas Drive. For that project, the City acted as a conduit to allow the developer to issue tax exempt bonds. The City Council held a TEFRA public hearing as part of that process. Neither the City nor the Redevelopment Agency is responsible for the principal and interest payments on the bonds for Heritage Park. It is also worth mentioning that the City used its bonding authority as a conduit to allow Methodist Hospital to issue the bonds to fund its current expansion. For Campus Commons, up to $9 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 of CSCDA. 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. The developers apply to CSCDA for the bond allocation. The bonds would be repaid by the project. Neither the City nor the Agency would 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 that process will be complete. As a reminder, the Council approved the entitlements for the Campus Commons project at its July 6 meeting. While it approved the concept of a long term loan from the Agency for the project on July 6 the Owner Participation Agreement (OPA) and Loan Agreement will be scheduled for a future meeting. Approval of the authorization for the developers to utilize the City as a conduit to issue up to $9 million in tax exempt bonds does not impact future consideration of the OPA and Loan Agreement. CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) Consideration of approving the issuance of tax exempt bonds for the Campus Commons project is exempt from CEQA because it is considered not a project per Section 15061(b)(3) of the guidelines. The Campus Commons project had a negative declaration approved by the Council at its July 6 meeting as part of the approval of the entitlements. FISCAL IMPACT There is no fiscal impact from the approval of the tax exempt bonds. RECOMMENDATION Pursuant to the TEFRA hearing, approve Resolution No. 6738 authorizing the issuance of up to $9 million of tax exempt bonds by CSCDA for the Campus Commons senior housing project. By: 4.DB0.4.-t Donald Penman, City Manager Attachment: Resolution No. 6738 TEFRA Public Hearing /Campus Commons August 17, 2010 Page 2 of 2 and RESOLUTION NO. 6738 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARCADIA APPROVING THE ISSUANCE BY THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY OF MULTIFAMILY HOUSING REVENUE BONDS FOR THE CAMPUS COMMONS APARTMENTS WHEREAS, the California Statewide Communities Development Authority (the "Authority ") is authorized pursuant to the provisions of California Government Code Section 6500 et seq. and the terms of an Amended and Restated Joint Exercise of Powers Agreement, dated as of June 1, 1988 (the "Agreement "), among certain local agencies throughout the State of California, including the City of Arcadia (the "City "), to issue revenue bonds in accordance with Chapter 7 of Part 5 of Division 31 of the California Health and Safety Code for the purpose of financing multifamily rental housing projects; WHEREAS, Arcadia Campus Commons Associates, a California limited partnership, has requested that the Authority adopt a plan of financing providing for the issuance of multifamily housing revenue bonds (the "Bonds ") in one or more series issued from time to time, including bonds issued to refund such revenue bonds in one or more series from time to time, and at no time to exceed $9,000,000 in outstanding aggregate principal amount, to finance the acquisition, construction and development of a 43 -unit multifamily rental housing project located at 16 Campus Drive, Arcadia, California, generally known as Campus Commons Apartments (the "Project ") and operated by Buckingham Property Management; and WHEREAS, the Bonds or a portion thereof will be "private activity bonds" for purposes of the Internal Revenue Code of 1986 (the "Code "); and WHEREAS, pursuant to Section 147(f) of the Code, prior to their issuance, private activity bonds are required to be approved by the "applicable elected representative" of the governmental units on whose behalf such bonds are expected to be issued and by a governmental unit having jurisdiction over the entire area in which any facility financed by such bonds is to be located, after a public hearing held following reasonable public notice; and WHEREAS, the members of this City Council (this "City Council ") are the applicable elected representatives of the City; and WHEREAS, there has been published, at least 14 days prior to the date hereof, in a newspaper of general circulation within the City, a notice that a public hearing regarding the Bonds would be held on a date specified in such notice; and WHEREAS, such public hearing was conducted on such date, at which time an opportunity was provided to interested parties to present arguments both for and against the issuance of the Bonds; and WHEREAS, the Authority is also requesting that the City Council approve the issuance of any refunding bonds hereafter issued by the Authority for the purpose of refinancing the Bonds which financed the Project (the "Refunding Bonds "), but only in such cases where federal tax laws would not require additional consideration or approval by the City Council; and WHEREAS, it is intended that this resolution shall constitute the approval of the issuance of the Bonds required by Section 147(f) of the Code and Section 9 of the Agreement; 2 NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ARCADIA, CALIFORNIA, DOES HEREBY FIND, DETERMINE AND RESOLVE AS FOLLOWS: SECTION 1. The above recitals are true and correct. SECTION 2. The City Council hereby approves the issuance of the Bonds and the Refunding Bonds by the Authority. It is the purpose and intent of the City Council that this Resolution constitute approval of the Bonds for the purposes of (a) Section 147(f) of the Code and (b) Section 9 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 that 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 approved hereby. SECTION 4. The City Clerk shall forward a certified copy of this Resolution and a copy of the affidavit of publication of the hearing notice to: Justin Cooper, Esq. Orrick, Herrington & Sutcliffe LLP 405 Howard Street San Francisco, California 94105 SECTION 5. This Resolution shall take effect immediately upon its adoption. SECTION 6. The City Clerk shall certify to the adoption of this Resolution. 3 ATTEST: City Clerk APPROVED AS TO FORM: Q/Li 6(47 Stephen P. Deitsch City Attorney Passed, approved and adopted this day of , 2010. 4 Mayor of the City of Arcadia