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HomeMy WebLinkAboutD-1 Staff Report - Public Hearing Alosta Gardens Draft TEFRAPublic Hearing Alosta Gardens TEFRA May 18, 2020 Page 1 of 3 PUBLIC HEARING D-1 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: TALIKA JOHNSON, DIRECTOR OF FINANCE VIA: SERGIO GONZALEZ, CITY MANAGER DATE: MAY 18, 2020 SUBJECT: PUBLIC HEARING TO ADOPT A RESOLUTION APPROVING THE ISSUANCE OF BONDS BY THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY FOR THE PURPOSE OF FINANCING THE ACQUISITION AND REHABILITATION OF A 61-UNIT MULTIFAMILY RENTAL HOUSING PROJECT GENERALLY KNOWN AS ALOSTA GARDENS APARTMENTS. BACKGROUND: CLG Alosta, LP (the “Borrower”) has requested that the California Statewide Communities Development Authority (“CSCDA”) serve as the municipal issuer of tax-exempt multi-family affordable housing revenue bonds in an aggregate principal amount not to exceed $30,000,000 (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 and rehabilitation of a 61-unit affordable multifamily housing rental project located at 745 East 5th Street, Azusa, California (the “Project”), which will be owned by the Borrower. To proceed with the bond issuance, the City must conduct the public hearing under the requirements of the Tax and Equity Fiscal Responsibility Act (“TEFRA”) and the Internal Revenue Code of 1986, as amended. Approval of the recommended actions does not result in any financial obligation to the City. RECOMMENDATIONS: Staff recommends the City Council take the following actions: 1) Conduct the public hearing under the requirements of the Tax and Equity Fiscal Responsibility Act (“TEFRA”) and the Internal Revenue Code of 1986, as amended (the “Code”). 2) Adopt Resolution No. 2020-C23 approving the issuance of Bonds by the California Statewide Communities Development Authority not to exceed $30,000,000, for the benefit Public Hearing Alosta Gardens TEFRA May 18, 2020 Page 2 of 3 of CLG Alosta, LP, to provide financing for the acquisition and rehabilitation of a 61-unit multifamily rental housing project generally known as Alosta Gardens Apartments, such adoption is solely for the purposes of satisfying the requirements of TEFRA, the Code and the California Government Code Section 6500 (and following). ANALYSIS: The Borrower requested that the CSCDA serve as the municipal issuer of tax-exempt multifamily affordable housing bonds (the “Bonds”) in an aggregate principal amount not to exceed $30,000,000. 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 and rehabilitation of a 61-unit affordable multifamily housing rental project, generally known as Alosta Gardens Apartments. In order for all or a portion of the Bonds to qualify as tax-exempt bonds, the City of Azusa 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. 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 unit hosting the Project must provide its approval of the issuance of the Bonds for the financing of the Project. 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 Azusa. 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. Issuance fees are shared with both the League and CSAC which provide benefits to all city and county members. The Joint Exercise of Powers Agreement provides that the CSCDA is a public entity, separate and apart from each member executing such agreement. The debts, liabilities and obligations of the CSCDA do not constitute debts, liabilities or obligations of the members executing such agreement. The Bonds to be issued by the 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. Public Hearing Alosta Gardens TEFRA May 18, 2020 Page 3 of 3 Participation by the City in the CSCDA will not impact the City’s appropriations limits and will not constitute any type of indebtedness of the City. Outside of holding the TEFRA hearing and adopting the required resolution, no other participation or activity of the City or the City Council with respect to the issuance of the Bonds will be required. FISCAL IMPACT: There is no fiscal impact to the City. The public hearing is a requirement of the financing package and is the City’s only involvement. Prepared by: Reviewed and Approved: Talika M. Johnson Sergio Gonzalez Director of Finance City Manager Attachment: 1) Resolution No. 2020-C23 RESOLUTION NO. 2020-C23 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA APPROVING THE ISSUANCE BY THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY OF MULTIFAMILY HOUSING REVENUE BONDS FOR THE ALOSTA GARDENS 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 Azusa (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, CLG Alosta, LP or a partnership of which California Landmark Group (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 $30,000,000 in outstanding aggregate principal amount (the “Bonds”), to finance or refinance the acquisition, rehabilitation and development of a multifamily rental housing project located at 745 East 5th Street, Azusa, California (the “Project”); and WHEREAS, pursuant to Section 147(f) of the Code, prior to their issuance, the 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 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 Attachment 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 AZUSA 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 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. This resolution shall take effect immediately upon its passage. ADOPTED by the City Council of the City of Azusa at a regular meeting of said Council held on the 18th day of May, 2020, by the following vote: AYES: NOES: ABSENT: Mayor ATTEST: City Clerk