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HomeMy WebLinkAboutD-2 Staff Report - Alosta Gardens TEFRA City of AzusaPUBLIC HEARING/SCHEDULED ITEM D-2 TO:HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL VIA: SERGIO GONZALEZ, CITY MANAGER FROM: TALIKA M. JOHNSON, DIRECTOR OF ADMINISTRATIVE SERVICES DATE: MARCH 20, 2023 SUBJECT: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA APPROVING A PLAN OF FINANCE FOR THE ISSUANCE OF REVENUE BONDS BY THE CALIFORNIA MUNICIPAL FINANCE AUTHORITY IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $55,000,000 TO FINANCE AND REFINANCE A 61-UNIT MULTIFAMILY HOUSING FACILITY FOR THE BENEFIT OF A LIMITED PARTNERSHIP OR OTHER OWNERSHIP ENTITY TO BE CREATED BY BOLD COMMUNITIES, A CALIFORNIA NONPROFIT PUBLIC BENEFIT CORPORATION, CALIFORNIA LANDMARK GROUP, A CALIFORNIA CORPORATION, OR AN AFFILIATE OF EITHER, AND CERTAIN OTHER MATTERS RELATING THERETO BACKGROUND: Bold Communities, a California nonprofit public benefit corporation(the “Sponsor”), on behalf of a limited partnership or another ownership entity to be created by the Sponsor, California Landmark Group, a California corporation, or an affiliate of either (such limited partnership or other ownership entity being referred to herein as the “Borrower”), has requested that the California Municipal Finance Authority (the “CMFA”) issue revenue bonds in an aggregate principal amount not to exceed $55,000,000 (the “Bonds”), to (1) finance and refinance the acquisition, rehabilitation, improvement and equipping of a 61-unit multifamily rental housing facility for low-income households (the “Project”) to be owned and operated by the Borrower and located at 745 E. 5th Street in the City of Azusa, California (the “City”), and (2) pay certain expenses in connection with the issuance of the Bonds. Approved City Council March 20, 2023 TEFRA Hearing – Alosta Gardens March 20, 2023 Page 2 To proceed with the issuance of the Bonds, the City of Azusa must conduct a 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 of 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. 2023-C15 approving the issuance of the Bonds by the CMFA for the benefit of the Borrower, to provide for the financing of the Project, such adoption is solely for the purposes of satisfying the requirements of TEFRA, the Code and the California Government Code Section 6500 et seq. THE BORROWER: Founded by President Michael Miller, Bold Communities (“Bold”) is a minority-led organization. that was established in 2021. Bold is focused on building bold, innovative, socially conscious, economically viable projects that enhance the lives of residents and tenants and complements the fabric of the communities in which it invests. Bolds mission is to attack the housing crisis with an enthusiasm unknown to mankind. In order for all or a portion of the Obligations 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 or obligations 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 Obligations for the financing of the Project. CALIFORNIA MUNICIPAL FINANCE AUTHORITY: The California Municipal Finance Authority (the “CMFA”) was created on January 1, 2004 pursuant to a joint exercise of powers agreement to promote economic, cultural and community development, through the financing of economic development and charitable activities throughout California. To date, over 350 municipalities, including the City of Azusa, have become members of CMFA. The CMFA was formed to assist local governments, nonprofit public benefit corporations and businesses with the issuance of taxable and tax-exempt bonds or obligations aimed at improving TEFRA Hearing – Alosta Gardens March 20, 2023 Page 3 the standard of living in California. The CMFA’s representatives and its Board of Directors have considerable experience in bond financing. The Joint Exercise of Powers Agreement provides that the CMFA is a public entity, separate and apart from each member executing such agreement. The debts, liabilities and obligations of the CMFA do not constitute debts, liabilities or obligations of the members executing such agreement. The Obligations to be issued by the CMFA for the Project will be the sole responsibility of the Borrowers, and the City will have no financial, legal, moral obligation, liability or responsibility for the Project or the repayment of the Obligations for the financing of the Project. All financing documents with respect to the issuance of the Obligations will contain clear disclaimers that the Obligations are not obligations of the City or the State of California but are to be paid for solely from funds provided by the Borrowers. Participation by the City in the CMFA 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 Obligations will be required. The Board of Directors of the California Foundation for Stronger Communities, a California non- profit public benefit corporation (the “Foundation”), acts as the Board of Directors for the CMFA. Through its conduit issuance activities, the CMFA shares a portion of the issuance fees it receives with its member communities and donates a portion of these issuance fees to the Foundation for the support of local charities. With respect to the City of Azusa, it is expected that 25% of the issuance fee attributable to the City will be granted by the CMFA to the general fund of the City. Such grant may be used for any lawful purpose of the City. In light of the foregoing, and in order to support affordable housing, staff recommends that the City conduct the TEFRA Hearing and adopt the resolution in favor of the issuance of the Obligations by the CMFA. FISCAL IMPACT: There is no fiscal impact to the City. The public hearing is a requirement of the financing and is the City’s only involvement. Prepared by: Reviewed and Approved: Talika M. Johnson Sergio Gonzalez Director of Administrative Services City Manager Attachment: 1) Resolution No. 2023-C15 RESOLUTION NO. 2023-C15 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA APPROVING A PLAN OF FINANCE FOR THE ISSUANCE OF REVENUE BONDS BY THE CALIFORNIA MUNICIPAL FINANCE AUTHORITY IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $55,000,000 TO FINANCE AND REFINANCE A 61-UNIT MULTIFAMILY HOUSING FACILITY FOR THE BENEFIT OF A LIMITED PARTNERSHIP OR OTHER OWNERSHIP ENTITY TO BE CREATED BY BOLD COMMUNITIES, A CALIFORNIA NONPROFIT PUBLIC BENEFIT CORPORATION, CALIFORNIA LANDMARK GROUP, A CALIFORNIA CORPORATION, OR AN AFFILIATE OF EITHER, AND CERTAIN OTHER MATTERS RELATING THERETO WHEREAS, Bold Communities, a California nonprofit public benefit corporation(the “Sponsor”), on behalf of a limited partnership or another ownership entity to be created by the Sponsor, California Landmark Group, a California corporation, or an affiliate of either (such limited partnership or other ownership entity being referred to herein as the “Borrower”), has requested that the California Municipal Finance Authority (the “Authority”) issue from time to time one or more series of revenue bonds in an aggregate principal amount not to exceed $55,000,000 (the “Bonds”), including but not limited to revenue bonds issued as part of a plan to (1)finance and refinance the acquisition, rehabilitation, improvement and equipping of a 61-unit multifamily rental housing facility for low-income households (the “Project”) to be owned and operated by the Borrower and located at 745 E. 5th Street in the City of Azusa, California (the “City”), and (2) pay certain expenses in connection with the issuance of the Bonds; and WHEREAS, an “applicable elected representative” of a jurisdiction in which the Project is located is required to approve the issuance of the Bonds under Section 147(f) of the Code; and WHEREAS, the City Council of the City (the “City Council”) is the elected legislative body of the City and is an “applicable elected representative” for purposes of Section 147(f) of the Code; and WHEREAS, the Authority has requested that the City Council approve the issuance of the Bonds by the Authority in order to satisfy the public approval requirement of Section 147(f) of the Code and the requirements of Section 4 of the Joint Exercise of Powers Agreement Relating to the California Municipal Finance Authority, dated as of January 1, 2004 (the “Agreement”), among certain local agencies, including the City; and WHEREAS, pursuant to Section 147(f) of the Code, the City Council has, following notice duly given, held a public hearing regarding the issuance of the Bonds, and now desires to approve the plan of finance for the issuance of the Bonds by the Authority; NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Azusa as follows: Section 1. The foregoing recitals are true and correct. Attachment 1 Section 2. The City Council hereby approves the issuance of the Bonds by the Authority, including but not limited to Bonds issued as part of a plan to finance and refinance the facilities described herein. 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 Project, for the purposes of (a) Section 147(f) of the Code by the applicable elected representative of a governmental unit having jurisdiction over the area in which the Project is located, in accordance with said Section 147(f) and (b) Section 4 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 which 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 transaction approved hereby. Section 4. The Clerk shall forward a certified copy of this Resolution to the Authority in care of its counsel: Ronald E. Lee, Esq. Jones Hall, A Professional Law Corporation 475 Sansome Street, Suite 1700 San Francisco, California 94111 Section 5. This resolution shall take effect immediately upon its adoption. PASSED AND ADOPTED by the City Council of the City of Azusa this ___ day of _________, 2023. AYES: NOES: ABSTAIN: ABSENT: [SEAL] Attest: By:__________________________ City Clerk