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HomeMy WebLinkAbout75A - PH TAX EXEMPT BONDS AQUA APTSREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: 4, 2018 TITLE: PUBLIC HEARING ON ISSUANCE OF TAX EXEMPT BONDS FOR THE BENEFIT OF AQUA APARTMENTS AND NEW RESOLUTION APPROVING THE ISSUANCE OF BONDS (STRATEGIC PLAN NO. 5,3) -X0XM ��WMANAGER APPLICANT REQUESTED ACTION CLERK OF COUNCIL USE ONLY: APPROVED ❑ As Recommended ❑ As Amended ❑ Ordinance on 131 Reading ❑ Ordinance on 2nd Reading ❑ Implementing Resolution ❑ Set Public Hearing For CONTINUED TO FILE NUMBER Conduct a new Tax Equity and Fiscal Responsibility Act Hearing in consideration of the issuance of tax exempt bond financing by the California Statewide Communities Development Authority on behalf of Aqua Housing LP (the `Borrower"), for the benefit of Aqua Apartments (the "Project') to finance the acquisition, rehabilitation, improvement, and equipping of the Project, a 57 -unit multifamily rental housing project located at 317 East 17th Street, Santa Ana, California. 2. Adopt a new resolution approving the issuance of revenue bonds by the California Statewide Communities Development Authority in an amount not to exceed $30,000,000 for the purpose of financing the acquisition, rehabilitation, improvement and equipping of Aqua Apartments, a 57 -unit multifamily rental housing project. DISCUSSION On December 19, 2017, City Council conducted a TEFRA hearing in consideration of the issuance of tax exempt bond financing by the California Statewide Communities Development Authority for the benefit of the Borrower and adopted a resolution approving the issuance of bonds. However, the project is expected to close on their financing after December 19, 2018 which is when the prior TEFRA approval expires. TEFRA approvals are only valid for one year and the prior hearing was held on December 19, 2017. Therefore, staff is requesting City Council to approve a new resolution to allow the project to have a valid TEFRA approval at the time of their closing. Community Development Partners (the "Developer') has requested that the California Statewide Communities Development Authority ("CSCDA" or the "Authority") adopt a plan of financing providing for the issuance of one or more series of revenue bonds issued, including bonds issued to refund such revenue bonds in one or more series from time to time, in an aggregate principal 75A-1 Aqua Apartments — TEFRA Hearing December 4, 2018 Page 2 amount not to exceed $30,000,000 (the "Bonds") for the acquisition, rehabilitation, improvement and equipping of a 57 -unit multifamily rental housing project located at 317 East 17th Street, Santa Ana, California, generally known as Aqua Apartments. However, in order for all or a portion of the Bonds to qualify as tax-exempt bonds, the City of Santa Ana must conduct a public hearing (the "TEFRA Hearing") providing for the members of the community an opportunity to speak in favor of or against the use of tax-exempt bonds for the financing of the Project. Following the close of the TEFRA Hearing, an "applicable elected representative" of the governmental unit hosting the Project, in this case the City, must provide its approval of the issuance of the Bonds by the Authority for the refinancing of the Project. The bonds to be issued by the Authority are the sole responsibility of the borrower. The City has no financial or legal liability for the project or repayment of the bonds and does not constitute any type of indebtedness for the City. In addition, this TEFRA Hearing and the adoption of the Resolution shall not obligate the City or any department thereof to (i) provide any financing to acquire or construct the Project or any refinancing of the Project; (ii) approve any application or request for or take any other action in connection with any planning approval, permit or other action necessary for the acquisition, construction, rehabilitation, installation or operation of the Project; (iii) make any contribution or advance any funds whatsoever to the Authority; or (iv) take any further action with respect to the Authority or its membership therein. In general, this action by the City of Santa Ana will not obligate the City or any department thereof to undertake any discretionary action related to the development of the project. California Statewide Communities Development Authority CSCDA is a joint powers authority sponsored by the League of California Cities ("League") and the California State Association of Counties ("CSAC"). CSCDA was created by the League and CSAC in 1988 to enable local government and eligible private entities access to low-cost, tax-exempt financing for projects that provide a tangible public benefit, contribute to social and economic growth and improve the overall quality of life in local communities throughout California. CSCDA is comprised of more than 530 members, including the City of Santa Ana. CSCDA has issued more than $60 billion through 1,400 plus financings since 1988 and consistently ranks in the top 10 of more than 3,000 nationwide public issuers of tax-exempt debt, as measured by annual issuance amount. Both the League and CSAC continue to sponsor CSCDA. Issuance fees are shared with both the League and CSAC which have kept member dues unchanged and provide other benefits to all city and county members. Backoround on the Proiect The Aqua Apartments project includes the acquisition and demolition of an underutilized, blighted motel site to construct 57 units of permanent supportive housing targeting chronically homeless individuals and small families. The project is located at 317 E. 17th Street. The approximately 34,000 square foot development will provide 12 studio and 45 one -bedroom apartment homes (including one manager's unit) with open space, a community room, offices for property management and Mercy House Living Centers staff who will provide on-site case management and services coordination for each resident. Rent levels at the property will be restricted for 55 years to households earning at or below 60% of the Area Median Income. Additionally, the property will have a Project -Based Voucher Housing Assistance Payments Contract in place further restricting eligibility to chronically homeless individuals. 75A-2 Aqua Apartments — TEFRA Hearing December 4, 2018 Page 3 The property is situated along the north side of 17th Street, with the 1-5 freeway bordering the property to the east and single family and multifamily buildings to the west. The building design includes one level of an on -grade structured garage with 36 parking stalls along with guest parking near the entrance to the property. There are two 4 -story residential buildings, the first of which includes the management and services offices along 17th street, in the commercial zoned section of the property. Buildings are connected by a catwalk and serviced by an elevator. Interior units will be improved with energy efficient appliances, low -flow plumbing fixtures, solid surface countertops, vinyl plank flooring, A/C and heat. The owner will pay utilities and common area laundry will be provided. The project will be financed through 4% federal low-income housing tax credit equity, permanent hard debt, Affordable Housing Program funds, Mental Health Services Act funds, and deferred developer fee. Fifty-six Project -Based Vouchers (PBVs) from the Santa Ana Housing Authority have been awarded, which will ensure all residents have rental assistance and pay no more than 30% of their income. Mercy House and the property management company will follow a Housing First model and make every effort to help applicants get approved for and then maintain housing. Mercy House will take applicant referrals from the Coordinated Entry System and work with applicants to secure housing. The Project received site plan / design review approval on June 20, 2017, and received an allocation of 4% low-income housing tax credits in October 2018. Construction start is anticipated by February 2019 with completion in April 2020. The Housing Element of the City's General Plan contains various goals and policies which are intended to provide a diversity of quality housing, affordability levels and living experiences that accommodate Santa Ana's residents to foster an inclusive community. Additionally, the General Plan encourages development of affordable rental and ownership housing for seniors, people with disabilities, families with children, and people needing emergency, transitional or supportive housing options. STRATEGIC PLAN ALIGNMENT Approval of this item supports the City's efforts to meet Goal # 5 - Community Health, Livability, Engagement & Sustainability, Objective # 3 (Facilitate diverse housing opportunities and support efforts to preserve and improve the livability of Santa Ana neighborhoods). FISCAL IMPACT The City received a payment of $832.40 in November 2018 to hold a TEFRA Hearing for this project that was deposited into Account # 01102002-53902. APPR VED AS TO FUNDS AND ACCOUNTS: Steven A. Mendoza Ka hryn Downs, CPAP Executive Director Executive Director Community Development Agency Finance and Management Services Agency Exhibits: 1. Resolution 2. Notice to Applicant 75A-3 75A-4 EXHIBIT 1 RESOLUTION NO. 2018- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA ANA APPROVING THE ISSUANCE BY THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY OF MULTIFAMILY HOUSING REVENUE BONDS FOR THE AQUA 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 Santa Ana (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; and WHEREAS, Aqua Housing LP or a partnership created by Community Development Partners (the "Developer"), consisting at least of the Developer or a related person to the Developer and one or more limited partners, 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 $30,000,000 in outstanding aggregate principal amount, to finance or refinance the acquisition, construction and development of a 57 - unit multifamily rental housing project located at 317 E. 171h Street, Santa Ana, California, generally known as Aqua Apartments (the 'Project') and operated by Solari Enterprises, Inc.; 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 75A-5 EXHIBIT 1 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; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA 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 issuance of the Bonds shall be subject to approval of the Authority of all financing documents relating thereto to which the Authority is a party. The City shall have no responsibility or liability whatsoever with respect to repayment or administration of the Bonds. Section 4. The adoption of this Resolution shall not obligate the City or any department thereof to: (i) provide any financing with respect to the Project; (li) approve any application or request for or take any other action in connection with any planning approval, permit or other action necessary with respect to the Project; (iii) make any contribution or advance any funds whatsoever to the Authority; or (iv) take any further action with respect to the Authority or its membership therein. Section 5. The City Manager and applicable Executive Directors 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 6. This resolution shall take effect immediately upon adoption. ADOPTED this 01 day of December, 2018. APPROVED AS TO FORM: Sonia R. Carvalho City Attorney a Miguel A. Pulido Mayor 75A-6 AYES: Councilmembers NOES: Councilmembers ABSTAIN: Councilmembers NOT PRESENT: Councilmembers 75A-7 EXHIBIT 1 75A-8 MAYOR Miguel A. Pulido MAYOR PRO TEM Michele Martinez COUNCILMEMBERS P. David Benavides Vicente Sarmiento Jose Solorio Sal Tinalero Juan Villages November 14, 2018 Kyle Paine, President 3416 Via Oporto, Suite # 301 Newport Beach, CA 92661 CITY OF SANTA ANA 20 Civic Center Plaza • P.O. Box 1988 Santa Ana, California 92702 W vW.santa-ana.oro Subject: Notice to Applicant Regarding Request for TEFRA Hearing Dear Mr. Paine, EXHIBIT 2 CITY MANAGER Raul Godinez II CITY ATTORNEY Sonia R. Carvalho CLERK OF THE COUNCIL Maria D. Huizar This is in response to your request for the City of Santa Ana to conduct a Tax Equity and Fiscal Responsibility Act Hearing in consideration of the issuance of tax exempt bond financing by the California Statewide Communities Development Authority on behalf of Community Development Partners for the benefit of Aqua Apartments. The TEFRA Hearing has been placed on our City Council agenda for December 4, 2018 per your request. This TEFRA Hearing is not being considered by City Council as a recommended action per our staff. Instead this item is being considered as an applicant requested action. hi addition, this TEFRA Hearing and the adoption of the Resolution shall not obligate the City or any department thereof to (i) provide any financing to acquire or construct the Project or any refinancing of the Project; (ii) approve any application or request for or take any other action in connection with any planning approval, permit or other action necessary for the acquisition, construction, rehabilitation, installation or operation of the Project; (iii) make any contribution or advance any funds whatsoever to the Authority; or (iv) take any further action with respect to the Authority or its membership therein. In general, this action by the City of Santa Ana will not obligate the City or any department thereof to undertake any discretionary action related to the development of your project. If you have any questions regarding this notice, I can be reached by telephone at (714) 667-2241 or by e-mail at'bri ounxnusatita-ana.org. Sincerely, Judson Brown Housing Division Manager SANTA ANA CITY COUNCIL Miguel A. Pulido Michele Martinez Vicente Sarmiento Jose Solorio P. Davld BenaAse Juan Villegas Sal Tinajero Mayor Mayor Pro Tem, Ward 2 Ward Ward Ward Ward Ward moulido(o)santa-ana.ora ffl1M9ine4(dsarAa-ana.om vsarmiento(a)saro-ana.ora Isolorio(o� n -an-. dbenavitles(alsanla-ana.ora ivilleaslidganta-ane.ora stinaiero(ol5anta-ane org 75A-10