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HomeMy WebLinkAbout75B - PH - TAX BONDSREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: AUGUST 15, 2017 TITLE: PUBLIC HEARING ON ISSUANCE OF TAX EXEMPT BONDS FOR THE HENINGER VILLAGE APARTMENTS AND RESOLUTION APPROVING THE ISSUANCE OF BONDS (STRATEGIC PLAN NO. 5, 3) INTERIM TY MANAGER) RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: ❑ As Recommended ❑ As Amended ❑ Ordinance on 1" Reading ❑ Ordinance on 2na Reading ❑ Implementing Resolution ❑ Set Public Hearing For CONTINUED TO FILE NUMBER 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 for the benefit of Heninger 2016 LP, to provide financing for the acquisition, rehabilitation, improvement, and equipping of a 58 -unit multifamily rental housing project generally known as Heninger Village Apartments. 2. Adopt a resolution approving the issuance of Bonds by the California Statewide Communities Development Authority not to exceed $14,000,000, for the benefit of Heninger 2016 LP, to provide financing for the acquisition, rehabilitation, improvement, and equipping of a 58 -unit multifamily rental housing project generally known as Heninger Village Apartments. DISCUSSION Heninger 2016 LP (the `Borrower") has requested that the California Statewide Communities Development Authority ("CSCDA") serve as the municipal issuer of tax-exempt multi -family housing revenue bonds in an aggregate principal amount not to exceed $14,000,000 (the 'Bonds"). The proceeds of the Bonds will be used for the purpose of making a loan to the Borrower, to enable the Borrower to finance the acquisition, rehabilitation, improvement and equipping of a 58 -unit affordable multifamily housing rental project located at 200 South Sycamore Street, Santa Ana, California (the "Project"), which will be owned and operated by the Borrower. In order for all or a portion of the Bonds to qualify as tax-exempt bonds, the City of Santa Ana ("City") must conduct a Tax Equity and Fiscal Responsibility Act public hearing (the "TEFRA Hearing") providing 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. Adoption of the resolution is solely for the purposes of satisfying the requirements of the Tax Equity and Fiscal Responsibility Act (TEFRA), the Internal Revenue Service Code and the California Government Code Section 6500 (and following). Prior to such TEFRA Hearing, reasonable notice must be provided to the members of the community. Following the close of the TEFRA Hearing, an "applicable elected representative" of the governmental 7513-1 TEFRA Public Hearing for Heninger Village Apartments August 15, 2017 Page 2 unit hosting the Project must provide its approval of the issuance of the Bonds for the financing of the Project. A public notice was published on July 31, 2017 (Exhibit 1). On August 2, 2016, 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 Heninger 2016 LP and adopted a resolution approving the issuance of bonds. However, the project is expected to close on their financing after August 1, 2017 which is when the prior TEFRA approval expires. TEFRA approvals are only valid for one year and the prior hearing was held on August 2, 2016. Therefore, staff is requesting City Council to approve the same resolution as on August 2, 2016, to allow the project to have a valid TEFRA approval at the time of their closing. 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 500 members, including the City of Santa Ana. CSCDA has issued more than $54 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. The Bonds to be issued by CSCDA for the Project will be the sole responsibility of the Borrower, and the City will have no financial, legal, moral obligation, liability or responsibility for the Project or the repayment of the Bonds for the financing of the Project. All financing documents with respect to the issuance of the Bonds will contain clear disclaimers that the Bonds are not obligations of the City or the State of California, but are to be paid for solely from funds provided by the Borrower. STRATEGIC PLAN ALIGNMENT Approval of this item allows the City to meet Goal #5 Sustainability), Objective 3 (Facilitate diverse housing and improve the livability of Santa Ana neighborhoods). FISCAL IMPACT There is no fiscal impact associated with this action. Robert C. Corte Acting Executive Director Community Development Agency Exhibits: 1. Public Notice 2. Resolution (Community Health, Livability, Engagement & opportunities and support efforts to preserve 75B-2 ORANGE COUNTY REPORTER —SINCE 1921 — 600 W SANTA ANA BLVD, SANTA ANA, CA 92701 Telephone (714) 543-2027 / Fax (714) 542-6841 LAUREN SOMMERHAUSER ORRICK, HERRINGTON & SUTCLIFFE LLP 405 HOWARD ST SAN FRANCISCO, CA -94105 PROOF OF PUBLICATION (2015.5 C.C.P.) State of California j County of ORANGE ) as Notice Type: HRG - NOTICE OF HEARING Ad Description: HEARING - ISSUANCE OF MULTIFAMILY HOUSING I am a citizen of the United States and a resident of the State of California, I am over the age of eighteen years, and not a party to or interested in the above entitled matter. I am the principal clerk of the printer and publisher of the ORANGE COUNTY REPORTER, a newspaper published in the English language in the city of SANTA ANA, county of ORANGE, and adjudged a newspaper of general circulation as defined by the laws of the State of California by the Superior Court of the County of ORANGE, State of California, under date 06/20/1922, Case No. 13421. That the notice, of which the annexed is a printed copy, has been published in each regular and entire issue of said newspaper and not in any supplement thereof on the following dates, to -wit: 07/31/2017 Executed on: 07/31/2017 At Los Angeles, California I certify (or declare) under penalty of perjury that the foregoing is true and correct. Signature Email II IA I 0 I 0 I 01 0t 0I 4 II5I I1 III I I 6 l I1 I B'3 This space for filing stamp only 01 3035752 NOTICE OF PUBLIC HEARING REGARDING ISSUANCE OF MULTIFAMILY HOUSING REVENUE BONDS FOR HENINGER VILLAGE APARTMENTS NOTICE IS HEREBY GIVEN that, at is m., or es soon thereafter re the n radial revenue bonds In one or more series issued from time to time, including bondsissued to refund such revenue bonds in one or more series from time to time, and at no time to exceed $14,000,000 in outstanding aggregate principal amount, to finance the acquisition and rehabilitation of a 58 -unit senior multifamily rental housing project located at 200 S. Sycamore Street, Santa Ana, California. The facilities are to be owned byy Henninger 2018 LP (the "Borrowe/'J or a partnership created by KDF Communities LLC (the "Developer), consisting at least of the Developer or a related person to the Developer and one or more limited partners, operated by VPM Managemant Inc., and are generally known as Heninger Village Apartments (the 'Project'). Those wishing to comment on the proposed financing and the nature and location of the Project may either appear in parson at the public hearing or submit written comments, which must be received by the City prior to the hearing, written comments should be sent to City of Santa Ana at 20 Civic Center Plaza, 8th Floor, Santa Ana, California 92702, Attention: City Clerk. CITY CLERK City of Santa Ana Dated: July 31, 2017 7/31/17 OR43035752# Exhibit 1 75B-4 RESOLUTION NO. 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 HENINGER VILLAGE 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, Heninger 2016 LP or a partnership created by KDF Communities LLC (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 $14,000,000 in outstanding aggregate principal amount, to finance the acquisition and rehabilitation of a 58 -unit senior multifamily rental housing project located at 200 S. Sycamore Street, Santa Ana, California, generally known as Heninger Village Apartments (the "Project") and operated by VPM Management 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(1) 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 of Santa Ana (the "City"); and WHEREAS, on August 2, 2016, the City Council conducted a TEFRA hearing in consideration of the issuance of tax exempt bond financing by the Authority for the benefit of the Developer and adopted a resolution approving; the issuance of bonds; and Exhibit 2 75B-5 WHERAS, TEFRA approvals are only valid for one year and the project is expected to close on their financing after August 1, 2017, which is when the prior TEFRA approval expires, so a new TEFRA hearing and approval is required; 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 heating 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 WHEREAS, it is intended that this resolution shall constitute the approval of the issuance of the Bonds required by Section 1470 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; provided, however, that this Resolution shall not constitute an approval by the Council of the Project for any other purposes, including compliance thereof with CEQA, nor does it constitute an approval of the underlying credit or financial structure of the Bonds. The City shall not bear any responsibility for the issuance of the Bonds, the tax-exempt status of the Bonds, the repayment of the Bonds or any other matter related to the Bonds. Section 3. The officers 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 4. The adoption of this Resolution shall not obligate the City or any department thereof to (i) provide any financing for 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 or operation of the Project; or (iii) make any contribution or advance any funds whatsoever to the Authority. 75B-6 Section 5, ADOPTED this This resolution shall take effect immediately upon its passage. day of August, 2017, Miguel A. Pulido Mayor APPROVED AS TO FORM: Sonia R. al City Eytto}%4 Ryan 0. odge Assistan ity At AYES: NOES: ABSTAIN: NOT PRESENT: Councilmembers Councilmembers Councilmembers Councilmembers CERTIFICATION OF ATTESTATION AND ORIGINALITY 1, MARIA D. HUIZAR, Clerk of Council, do hereby attest to and certify the attached Resolution No. 2017-_ to be the original resolution adopted by the City Council of the City of Santa Ana. on August 12017, Date: Clerk of Council City of Santa Ana 75B-7 75B-8