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Reauthorization of Multi-Family Revenue Bonds - <br />Wakeham-Grant Apartments <br />August 6, 20D1 <br />Page 2 <br />Based an this unforeseen circumstance, the developer is considering other <br />options and alternatives to complete the bond sale far the project. <br />Those options are 1} request that the Housing Authority issue bonds <br />within the necessary timeframe required by the California Debt Limit <br />Advisory Committee (CDLAC} to preserve the allocation and secure a new <br />lender; or 2} allow the allocation of bond authority to expire and tax <br />exempt bands will not be sold. <br />In order to preserve the CDLAC allocation that has been authorized, the <br />developer has requested that the Housing Authority authorize the issuance <br />of short-term bonds, the proceeds of which will be deposited in an escrow <br />account to allow the developer time to secure alternative long-term <br />financing. The Authority would require the developer to obtain another <br />lender by March 15, 2002 or the funds deposited into escrow will be used <br />to repay the bonds. There will be no tax ar financial liability to the <br />Housing Authority should this occur. The developer would also be <br />required to pay all of the costs of the escrow financing. Once the <br />developer secures long-term financing the Housing Authority would proceed <br />to authorize the re-issuance of bonds. The developer has received <br />favorable responses from other lenders who are interested in further <br />dialog and time far due diligence to consider financial support far l~ng- <br />term financing. If the developer is unable to secure a new lender the <br />bands will be repaid and the sales transaction will not be completed. <br />The second option is that the developer relinquishes the option of <br />issuing bonds by failing to close within the prescribed timeframe. If <br />this were to occur the developer would not be able to complete the <br />acquisition of this project. Tt will be infeasible for the developer to <br />acquire the property and provide the level of rehabilitation and <br />affordability without the band allocation. The developer could not <br />reapply for band authority until next year and there is no guarantee that <br />they would be successful in obtaining another allocation. <br />Staff recommends that the Authority approve the issuance of bonds to be <br />deposited into an escrow account in order to preserve the highly <br />competitive bond authority awarded to this project, The bond proceeds <br />will be invested in an AAA-rated investment fund. Consistent with the <br />prior authorization, the Housing Authority will not incur any financial <br />liability due to the issuance of these tax-exempt bonds. The bond <br />documents appoint Newman & Associates, Inc. as the underwriter for escrow <br />financing. <br />Although all recommended actions of the Housing Authority of the City of <br />Santa Ana are first reviewed and acted upon by the Redevelopment and <br />Housing Commission, in this case there is insufficient time to process <br />this request through standard procedures. Therefore, this action of the <br />Housing Authority will be processed as an emergency action as required by <br />state and federal regulations. The Housing Authority declares this to be <br />an emergency matter under Health and Safety Code Section 34292 in order <br />for the Housing Authority to take action. <br />F, <br />