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Resolution Authorizing The Issuance <br />Of Multi -Family Housing Revenue <br />Bonds - City Gardens Apartments <br />November 20, 2006 <br />Page 2 <br />and the owner has requested that the Housing Authority issue bonds for <br />the purpose of refunding the existing bonds in the amount of $8,400,000. <br />The owner will also simultaneously obtain a taxable loan for the purpose <br />of refinancing other project debt. The new bonds will be variable rate, <br />which will be capped at 5.75% for five years. By refunding the bonds, <br />there will be a reduction of debt service and an increase in cash flow to <br />the project. <br />The bonds are considered "conduit" obligations. This means that although <br />the Housing Authority will issue the bonds, the owner is actually the <br />borrower and has sole responsibility for repayment. The bonds will be <br />repaid strictly out of the project's cash flow. There is no recourse to <br />the Housing Authority, the City of Santa Ana or the Community <br />Redevelopment Agency. <br />Under the existing bonds, the owner is required to reserve twenty <br />percent, or 55 units, for occupancy at affordable rents by households <br />whose incomes do not exceed forty percent of the Orange County area <br />median income. This means that currently, the maximum allowable rent is <br />$635 for a one -bedroom unit and $712 for a two-bedroom unit. The <br />reissuance of the bonds will extend the affordability for an additional <br />55 years to help preserve this affordable option. <br />The law firm of Jones Hall has been retained as bond counsel, and CSG <br />Advisors has been retained as financial advisor. Final issuance of the <br />bonds is conditioned on final underwriting and approval by the lender, <br />ARCS Commercial Mortgage, and approval by the Housing Authority. <br />FISCAL IMPACT <br />The issuance of tax-exempt bonds will result in owner payment of a one- <br />time issuer fee, an annual affordable monitoring fee, and an annual <br />payment of a fee in -lieu of property taxes. Funds received will be <br />deposited in the Issuer Fee account (account no. 133-01-5594) and the <br />Payment in Lieu of Taxes account (account no. 507-01-5594). <br />i <br />4'a <i A& <br />e11y an ry�ayle <br />Housin Manager <br />Community Development Agency <br />SGH/SLB/sr <br />APPROVED AS TO FUNDS AND ACCOUNTS: <br />a���' _� <br />y9rancisco GutierrezExecutive Director <br />Finance & Management Services Agency <br />