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Home My WebLink About75B - LEGACY SQUARE APARTMENTSREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: DECEMBER 17, 2019 TITLE: PUBLIC HEARING ON ISSUANCE OF TAX- EXEMPT BONDS FOR THE BENEFIT OF LEGACY SQUARE APARTMENTS AND RESOLUTION APPROVING THE ISSUANCE OF BONDS ($40,000,000) {STRATEGIC PLAN NO. 5,3) CLERK OF COUNCIL USE ONLY: ❑ As Recommended ❑ As Amended ❑ Ordinance on 1s' Reading ❑ Ordinance on 2nd Reading ❑ Implementing Resolution ❑ Set Public Hearing For CONTINUED TO /s/Kristine Ridge FILE NUMBER CITY MANAGER APPLICANT REQUESTED ACTION 1. 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 Legacy Square, L.P. (the 'Borrower"), for the benefit of Legacy Square Apartments (the "Project') to finance the acquisition, construction, and improvement of the Project, a 93-unit multifamily rental housing project located at 609 N. Spurgeon Street., Santa Ana, California. 2. Adopt a resolution approving the issuance of revenue bonds by the California Statewide Communities Development Authority in an amount not to exceed $40,000,000 for the purpose of financing the acquisition, construction, improvement and equipping of Legacy Square Apartments, a 93-unit multifamily rental housing project. DISCUSSION In order for an affordable housing project to secure 4-percent low-income housing tax credits, the California Debt Limit Allocation Committee requires that the project hold a Tax Equity and Fiscal Responsibility Act (TEFRA) Hearing prior to the issuance of the bonds. On January 15, 2019, the City Council approved a pre -loan commitment of $3.1 million in affordable housing funds and eight (8) project -based vouchers to develop a 93-unit affordable housing project called Legacy Square. Since that time, the developer has been working to secure their financing to develop the project. Toward that end, the developer is now requesting that the City hold a TEFRA Hearing, which will allow the developer to secure 4-percent tax credits for their project that they applied for on November 17, 2019. Specifically, the Legacy Square project includes the acquisition, construction, improvement, and equipping of a 93-unit 100-percent affordable transit -oriented multigenerational apartment home community. The Project will be located at 609 N Spurgeon Street, currently home to the Santa Ana United Methodist Church. National CORE (the "Developer") has executed a development 75B-1 Legacy Square Apartments — TEFRA Hearing December 17, 2019 Page 2 agreement with the Church for a ground lease of the land. The concept includes fundamental site planning features to foster community cohesion and instill a sense of belonging and dignity that comes from a thoughtfully designed residential community with a true sense of place. The homes will contain a long-term covenant to ensure continued affordability. The ground floor includes community space designed to be flexible to meet the current and future needs of the area's residents. The vision for the development aims to activate the area through the planned resident and community -serving uses and vibrant community events. Included will be separate meeting spaces for supportive service providers to host resident support services, including regular indoor activities, a computer center, and an after -school program, as well as offices for property management and case management for special needs residents. This indoor service amenity space is designed to be flexible and welcome other area service providers and veteran -serving programs as needed by the residents. Exterior patios within the building's podium -level central courtyard will provide outdoor gathering places for barbeques, a tot lot/play structure, and community garden. The Project will have excellent educational, social and health services that will be designed specifically for and available to the larger community. Mercy House and Hope Through Housing Foundation, who will provide such services, have extensive and broad experience on a continuum of programs and services that provide the tools and resources which future residents need to stabilize, grow and rebuild their lives. National CORE 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 from time to time, in one or more series from time to time, in an aggregate principal amount not to exceed $40,000,000 (the "Bonds") for the acquisition, construction, improvement and equipping of a 93-unit multifamily rental housing project located at 609 N Spurgeon Street, Santa Ana, California, generally known as Legacy Square 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 by adopting a resolution (Exhibit 1). 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) (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) (iii) make any contribution or advance any funds whatsoever to the Authority; or (iv) (iv) take any further action with respect to the Authority or its membership therein. 75B-2 Legacy Square Apartments — TEFRA Hearing December 17, 2019 Page 3 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 $63 billion through 1,600-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. 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 $865.03 in November 2019 to hold a TEFRA Hearing for this project, which was deposited into Account no. 01102002-53902. Steven A. Mendoza Executive Director Community Development Agency Exhibit: 1. Resolution APPROVED AS TO FUNDS AND ACCOUNTS: Kathryn Downs, CPA Executive Director Finance and Management Services Agency 75B-3 RESOLUTION NO. 2019- 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 LEGACY SQUARE 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, Legacy Square, L.P. or a partnership of which National Community Renaissance of California (the "Developer") or a related person to the Developer is the general partner, has requested that the Authority adopt a plan of financing providing for the issuance of exempt facility bonds for a qualified residential rental project pursuant to Section 142(a)(7) of the Internal Revenue Code of 1986 (the "Code") in one or more series issued from time to time, including bonds issued to refund such exempt facility bonds in one or more series from time to time, and at no time to exceed $40,000,000 in outstanding aggregate principal amount (the 'Bonds"), to finance or refinance the acquisition, construction and development of a multifamily rental housing project located at 609 North Spurgeon Street, Santa Ana, California (the "Project'); 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 7 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 75B-4 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; 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 issuance of the Bonds by the Authority, for the purposes of (a) Section 147(f) of the Code by the applicable elected representative of the governmental unit having jurisdiction over the area in which the Project is located, in accordance with said Section 147(f) 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; (ii) 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. 2 75B-5 ADOPTED this _ day of 2019. APPROVED AS TO FORM: Sonia R. Carvalho City Attorney By: Rya O. ge Assistant City Attorney NOES: Councilmembers ABSTAIN: Councilmembers NOT PRESENT: Councilmembers Miguel A. Pulido Mayor 3 75B-6