Housing Successor Agency
MEETING DATE: 5/25/2016
TITLE:
Title
Tax Equity and Fiscal Responsibility Act (TEFRA) Hearing on the Issuance of Tax-Exempt Revenue Bonds by California Public Finance Authority on behalf of Mountain View Community Partners, LP
End
FROM:
Tami Scott, Administrative Services Director
RECOMMENDATION:
Recommendation
It is recommended that the City Council conduct a public hearing to receive public comments on the issuance of tax-exempt revenue bonds by the California Public Finance Authority ("Authority") to finance the acquisition and rehabilitation of the Mountain View Apartments located at 68680 Dinah Shore Drive; and adopt the resolution authorizing the issuance of tax-exempt revenue bonds by California Public Finance Authority to also include authorization for the City of Cathedral City to join the California Public Finance Authority as an additional member; and that the City Council, acting in its capacity as the Housing Successor Agency to the former Redevelopment Agency of the City of Cathedral City authorize the inclusion of the City of Cathedral City, in its capacity as the Housing Successor to the former Redevelopment Agency of the City of Cathedral City, as a third party beneficiary to the regulatory agreement entered into by Mountain View Community Partners, LP ("borrower").
Body
BACKGROUND:
Prior to the issuance of bonds to finance the acquisition and rehabilitation of the Mountain View Apartments, a 280-unit Senior multifamily apartment complex located at 68680 Dinah Shore Drive (the “Project”), the Internal Revenue Code requires that the City first conduct a public hearing and adopt a resolution approving the issuance of tax exempt revenue bonds.
The City Council is being asked to adopt a resolution that would approve the issuance of tax-exempt revenue bonds by CalPFA in one or more series in a maximum aggregate principal amount of $23,000,000 (the “Bonds”) for the purpose of financing the acquisition and rehabilitation of the Project to be owned by Mountain View Community Partners, L.P. or a partnership created by Community Preservation Partners, LLC (the developer). The residents of Cathedral City benefit from the rehabilitation of the Mountain View Apartments and a continuation of affordable rents for the Project’s senior residents.
The City Council has been requested to conduct a TEFRA public hearing and approve the issuance of the Bonds for purposes of federal law and state law. The Bonds are limited obligations of CalPFA payable solely by the Borrower, and will not be direct obligations of CalPFA, the City or any member of CalPFA.
State law provides the ability for cities and counties to join together under cooperative agreements to form joint powers authorities to issue debt obligations to fund projects that provide a public benefit and serve the needs of residents within the jurisdictions of the participating members. Federal law allows these obligations to be issued on a tax-exempt basis under certain circumstances. Cities and counties in California have the ability to act as issuers of conduit bonds and other obligations, but many jurisdictions utilize joint powers authorities such as CalPFA, primarily for economies of scale and to access specialized transaction knowledge and resources.
CalPFA is a political subdivision of the State of California established under the Joint Exercise of Powers Act for the purpose of issuing tax-exempt conduit bonds for public and private entities throughout California. CalPFA is empowered to promote economic, cultural, and community development opportunities that create temporary and permanent jobs, affordable housing, community infrastructure and improve the overall quality of life in local communities. Staff recommends joining CalPFA as a member, which will allow the Authority to finance the Project. As a member, CalPFA will provide the City with an annual payment of 10% of the Authority’s collected administrative fees.
CalPFA is not permitted to issue bonds or notes for a project without first conducting a public (TEFRA) hearing and obtaining permission from the governing board of the jurisdiction in which the project is located, in this case the City Council for the City of Cathedral City.
DISCUSSION:
The financing for the Project involves the issuance of tax-exempt bonds and may be completed through CalPFA if the City joins as a member of CalPFA. The purpose of this TEFRA hearing is to receive public comment and request approval of the financing, as required by the Internal Revenue Code of 1986, as amended. The City has properly noticed this public hearing.
The City is the appropriate entity to conduct a public hearing and approve the issuance of the Bonds and the use of the proceeds of the Bonds pursuant to Section 147(f) of the Internal Revenue Code before the Bonds can be issued as tax-exempt obligations. In this case, the Borrower applied to CalPFA for the financing, and therefore CalPFA now seeks approval of the City Council on behalf of the Project.
The bonds will be issued in an amount not to exceed $23,000,000. The source of repayment of the Bonds will be limited to payments made by the Borrower to CalPFA. Neither the City, the County, nor the State is liable in any way for repayment of the Bonds. Proceeds from the bonds will include a full rehabilitation program addressing health and safety issues, ADA, deferred maintenance, and energy efficiency components where possible. Currently, the Developer is planning on replacing all countertops and cabinetry in units, replacing the windows, painting the kitchen and baths, addressing parking lot deferred maintenance, and replacing and upgrading building systems as necessary.
The City, in its capacity as the Housing Successor to the former Redevelopment Agency of the City of Cathedral City ("Housing Successor"), will also be included as a third party beneficiary to the regulatory agreement entered into relative to enforcing the affordability covenants required by the funding entities. In this manner, the City shall receive credit for assisting with the creation of these affordable units which will assist the Housing Successor in meeting its required inclusionary affordable housing requirements.
FISCAL IMPACT:
There is no fiscal impact to the General Fund for conducting a public hearing and adopting a resolution for the issuance of tax-exempt revenue bonds by California Public Finance Authority. The General Fund may, however, benefit from the receipt of 10% of the Authority's annual administrative fees. Such amount cannot be estimated at this time as it will vary from year to year and is payable only if such fee is actually collected by the Authority. In addition, the City, in its capacity as the Housing Successor, will incur the cost of issuing the public hearing notice but in return, will be credited with assisting in the creation of -------------------83 low-income affordable senior units and 193 median income-senior units
ATTACHMENTS:
Resolution