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HomeMy WebLinkAbout80A - JOINT PH - MORTGAGE REFUND BONDREQUEST FOR COUNCIL/ HOUSING AUTHORITY ACTION MEETING DATE: AUGUST 6, 2012 TITLE: PUBLIC HEARING - MORTGAGE REVENUE BOND INDUCEMENT AND TEFRA ON ISSUANCE OF TAX- EXEMPT BONDS WITH WASHINGTON PLACE MANAGEMENT, LLC CLERK OF COUNCIL USE ONLY: APPROVED ? As Recommended ? As Amended ? Ordinance on 1st Reading ? Ordinance on 2nd Reading ? Implementing Resolution ? Set Public Hearing For CONTINUED TO tAk t? G A41 GL-L (4 C6k&O,-C- "v FILE NUMBER CITY MANAGER EXECUTI DIRECTOR RECOMMENDED ACTION CITY COUNCIL ACTION Hold a TEFRA (Tax Equity and Financial Responsibility Act) Hearing in consideration of the issuance of multi-family housing revenue bonds by the Housing Authority of the City of Santa Ana for the purpose of financing the acquisition and rehabilitation of 1401 N. Flower Street by Washington Place Management, LLC. 2. Adopt a resolution approving the issuance of tax-exempt bonds for the project. HOUSING AUTHORITY ACTION Adopt a resolution relating to the issuance of bonds for the purpose of financing the acquisition and rehabilitation of multifamily rental housing located at 1401 N. Flower Street. COMMUNITY REDEVELOPMENT AND HOUSING COMMISSION RECOMMENDATION At its regular meeting on July 17, 2012, by a vote of 5:0 (Wooten and Reyes absent), the Community Redevelopment and Housing Commission adopted a resolution recommending approval of the issuance of multifamily housing revenue bonds by the Housing Authority of the City of Santa Ana for the purpose of financing the acquisition and rehabilitation of multifamily rental housing. 8OA-1 PH - Mortgage Revenue Bond Inducement and TEFRA August 6, 2012 Page 2 DISCUSSION Vitus Group, a for-profit affordable housing developer, is under contract to acquire and rehabilitate Wycliffe Plaza which is located at 1401 N. Flower Street (Exhibit 1). The developer will be forming a corporation which will be called Washington Place Management, LLC for the purpose of owning and operating this project. Wycliffe Plaza is a senior multifamily project that contains 200 one- bedroom units. The project currently has a Department of Housing and Urban Development (HUD) Section 8 and Section 236 contract which provides for 140 project-based rental assistance units. The tenants that are residing in the project-based units pay 30% of their income toward rent. The remaining 60 units are rent restricted but the tenant must pay the entire rent without any subsidy from the project. The Vitus Group has developed and owns more than 70 projects in 13 states, with 15 of those projects located in California. They have successfully acquired and rehabilitated over 6,000 subsidized senior units. The developer is proposing to acquire and rehabilitate the project by utilizing tax-exempt bonds and low income housing tax credits. The current affordability restrictions are due to expire in 2017. By virtue of the proposed funding, the affordability will be extended for 55 years. Of the 200 units, 59 units will be designated for very low-income and 140 units for low income households. One unit will be set aside for an onsite manager. All cost to acquire, rehabilitate and provide for the level of affordability for this project will be funded solely through the issuance of bonds and tax credit allocation. The project will undergo an extensive rehabilitation to address deferred maintenance, improve the physical condition of the property, and address long-term capital needs. Existing tenants will not be displaced during the rehabilitation, although may be temporarily relocated to a hotel or a renovated vacant unit should the need arise. The acquisition of the property is planned for December 2012 and the rehabilitation is anticipated to commence in February 2013 and be completed in June 2013. In order for the Housing Authority to apply for a bond allocation from the California Debt Limitation Allocation Committee on behalf of the developer, the Housing Authority must adopt an Inducement resolution relating to the bonds. The Inducement resolution confirms the Housing Authority's intent to issue the bonds and identifies the time at which costs expended on the project qualify for the financing with the tax-exempt bonds. The bonds are considered "conduit" obligations. This means that although the Housing Authority will issue the bonds, the owner is actually the borrower and has sole responsibility for repayment. The bonds will be repaid strictly out of the project's cash flow. There is no recourse to the Housing Authority or the City of Santa Ana. Prior to bonds being sold, the City Council must hold a public hearing as required by the Tax Equity and Fiscal Responsibility Act (TEFRA). The public hearing is to solicit comments on the project and the issuance of bonds. Holding the TEFRA is also a precondition to applying for the 8OA-2 PH - Mortgage Revenue Bond Inducement and TEFRA August 6, 2012 Page 3 bond allocation. On July 23 and July 30, 2012, public hearing notification was published in the Orange County Register. In addition, Orrick, Herrington & Sutcliffe, LLP will serve as bond counsel and CSG Advisors, Inc. will serve as financial consultant for the Housing Authority. Their fees will be paid by the developer. The acquisition and rehabilitation of this property will assist the City to meet their affordable housing goals as identified in the Consolidated Plan, and Housing Element. It will also ensure that the project, which is at risk of being removed from the City's affordable housing stock, will be maintained. FISCAL IMPACT The issuer fees generated from the issuance will be deposited into the issuer fee account (Account #13318002). APPROVED AS TO FUNDS AND ACCOUNTS: elly L y dry-Bayle Housing Division Manager Community Development Agency NTE/SLB/kg Exhibits: 1. Map 2. Resolutions Francisco Gutierrez Executive Director Finance & Management Services Agency 8OA-3 8OA-4 Exhibit 1 Map of 1401 N. Flower and Vicinity 15TH ST - - - ,Ian' USA 'Ih5 U11 (?(s» 141$1 W ?..., O Subject Co m - O LL ' Site ' ,u5 ,stt 3 ,3„ § M4 1 WILLARD INT WASHINGTON AV 8OA-5 E- r I 01 Y! 8OA-6 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA ANA APPROVING THE ISSUANCE OF MULTIFAMILY HOUSING REVENUE BONDS BY THE HOUSING AUTHORITY OF THE CITY OF SANTA ANA FOR THE PURPOSE OF FINANCING THE ACQUISITION AND REHABILITATION OF MULTIFAMILY RENTAL HOUSING BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA, AS FOLLOWS: Section 1: The City Council of the City of Santa Ana hereby finds, determines and declares as follows: A. The Housing Authority of the City of Santa Ana (the "Authority") is authorized by Chapter 1 of Part 2 of Division 24 (commencing with Section 34200) of the Health and Safety Code of the State of California (the "Law"), to issue and sell revenue bonds for the purpose of financing the acquisition, construction, rehabilitation and development of multifamily rental housing for families and individuals of low and very low income. B. Washington Place Partners, LP, a California limited partnership, or such other limited partnership or a limited liability company to be formed by Vitus Development, LLC, has requested the Authority to issue and sell revenue obligations in an expected principal amount of $30,000,000 (the "Obligations") pursuant to the procedures specified in the Law for the purpose of providing financing for the acquisition and rehabilitation of a 200-units of multifamily rental housing facility located at 1401 N. Flower Street in the City of Santa Ana, California (the "Project"), and located within the area of operation of the Authority. C. The Bonds will be considered to be "qualified exempt facility bonds" under Section 142 (a) of the Internal Revenue Code of 1986, as amended (the "Code"), and Section 147(f) of the Code requires that the "applicable elected representatives" with respect to the Authority hold a public hearing with respect to the issuance of the Bonds. D. The Authority has determined that the City Council of the City of Santa Ana is the "applicable elected representatives" to hold said public hearing. E. Notice of said public hearing has been duly given as required by the Code, and this City Council has heretofore held such public hearing at which all interested persons were given an opportunity to be heard on all matters relative to the financing and operation of the Project and the Authority's issuance of the Obligations therefore. F. The Project is located wholly within the geographic jurisdiction of the City. EXHIBIT 2 QO w _7 G. The City Council of the City of Santa Ana, as the "applicable elected representative" of the Authority, approves of the issuance of the Obligations as in the public interests of the Authority. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA ANA DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section 2. The City Council hereby finds and determines that the foregoing recitals are true and correct. Section 3. Pursuant to the Code, the City Council hereby approves the issuance of the Obligations by the Authority to finance the Project. It is the purpose and intent of this City Council that this resolution constitutes approval of the issuance of the Obligations by the applicable elected representative of the governmental unit having jurisdiction over the area in which the Project is located, in accordance with the Code. Section 4. The issuance of the Obligations shall be subject to approval by the Authority of all financing documents relating thereto to which the Authority is a party and subject to the sale of the Bonds by the Authority to the underwriter thereof. Section 5. This resolution shall take effect immediately. 80A-8 ADOPTED this day of , 2012. APPROVED AS TO FORM: Sonia R. Carvalho, City Attorney By: Lisa E. Storck Assistant City Attorney AYES: Councilmembers: NOES: Councilmembers: ABSTAIN: Councilmembers: NOT PRESENT: Councilmembers: Miguel A. Pulido Mayor CERTIFICATION OF ATTESTATION AND ORIGINALITY I, Maria D. Huizar, Clerk of Council, do hereby attest to and certify the attached Resolution No. 2012- to be the original resolution adopted by the City Council of the City of Santa Ana on Date: Clerk of Council City of Santa Ana 8OA-9 8OA-10 RESOLUTION NO. A RESOLUTION OF THE HOUSING AUTHORITY OF THE CITY OF SANTA ANA DECLARING ITS INTENTION TO REIMBURSE EXPENDITURES FROM THE PROCEEDS OF TAX-EXEMPT OBLIGATIONS AND DIRECTING CERTAIN ACTIONS BE IT RESOLVED BY THE HOUSING AUTHORITY OF THE CITY OF SANTA ANA, AS FOLLOWS: Section 1: The Board of the Housing Authority of the City of Santa Ana hereby finds, determines and declares as follows: A. The Housing Authority of the City of Santa Ana (the "Authority") intends to issue tax-exempt obligations (the "Obligations") for the purpose, among other things, of making a loan to Washington Place Partners, LP, a California limited partnership, or such other limited partnership or a limited liability company to be formed by Vitus Development, LLC (the "Developer"), the proceeds of which shall be used by the Developer to finance the acquisition, rehabilitation and development of a 200-unit of multifamily rental housing facility currently commonly known as Wycliffe Plaza located at 1401 N. Flower Street in the City of Santa Ana, California (the "Project"). B. United States Income Tax Regulations section 1.103-18 provides generally that proceeds of tax-exempt debt are not deemed to be expended when such proceeds are used for reimbursement of expenditures made prior to the date of issuance of such debt unless certain procedures are followed, among which is a requirement that (with certain exceptions), prior to the payment of any such expenditure, the issuer must declare an intention to reimburse such expenditure. C. It is in the public interest and for the public benefit that the Authority declare its official intent to reimburse the expenditures referenced herein. NOW, THEREFORE, BE IT RESOLVED that the Housing Authority of the City of Santa Ana DECLARES and ORDERS as follows: Section 2. The Authority intends to issue the Obligations for the purpose of paying the costs of financing the acquisition, rehabilitation and development of the Project. Section 3. The Authority hereby declares that it reasonably expects that a portion of the proceeds of the Obligations will be used for reimbursement of expenditures for the acquisition, rehabilitation and development of the Project that are paid before the date of initial execution and delivery of the Obligations. EXHIBIT 2 8OA-11 Section 4. The maximum amount of proceeds of the Obligations to be used for reimbursement of expenditures for the acquisition, rehabilitation and development of the Project that are paid before the date of initial execution and delivery of the Obligations is not to exceed $30,000,000. Section 5. The foregoing declaration is consistent with the budgetary and financial circumstances of the Authority in that there are no funds (other than proceeds of the Obligations) that are reasonably expected to be (i) reserved, (ii) allocated or (iii) otherwise set aside, on a long-term basis, by or on behalf of the Authority, or any public entity controlled by the Authority, for the expenditures for the acquisition and rehabilitation of the Project that are expected to be reimbursed from the proceeds of the Obligations. Section 6. The Developer shall be responsible for the payment of all present and future costs in connection with the issuance of the Obligations, including, but not limited to, any fees and expenses incurred by the Authority in anticipation of the issuance of the Obligations, the cost of printing any official statement, rating agency costs, bond counsel fees and expenses, underwriting discount and costs, trustee fees and expense, and the costs of printing the Obligations. The payment of the principal, redemption premium, if any, and purchase price of and interest on the Obligations shall be solely the responsibility of the Developer. The Obligations shall not constitute a debt or obligation of the Authority. Section 7. The appropriate officers or staff of the Authority are hereby authorized, for and in the name of and on behalf of the Authority, to make an application to the California Debt Limit Allocation Committee for an allocation of private activity bonds for the financing of the Project. Section 8. The adoption of this Resolution shall not obligate (i) the Authority to provide financing to the Developer for the acquisition, rehabilitation and development of the Project or to issue the Obligations for purposes of such financing; or (ii) the Authority, of or any department of the Authority or the City of Santa Ana to approve any application or request for, or take any other action in connection with, any environmental, General Plan, zoning or any other permit or other action necessary for the acquisition, rehabilitation, development or operation of the Project. Section 9. This resolution shall take effect immediately upon its adoption. -2- 80--12 ADOPTED this day of APPROVED AS TO FORM: Sonia R. Carvalho, General Counsel By: Lisa E. Storck Assistant Counsel AYES: NOES: ABSTAIN: NOT PRESENT: Boardmembers: Boardmembers: Boardmembers: Boardmembers: 2012. Miguel A. Pulido Chair CERTIFICATION OF ATTESTATION AND ORIGINALITY I, MARIA D. HUIZAR, Secretary to the Housing Authority, do hereby attest to and certify the attached Resolution No. 2012-_ to be the original resolution adopted by the Housing Authority of the City of Santa Ana on Date: Recording Secretary -3- 80--13 8OA-14