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HomeMy WebLinkAboutSR - RES-10850 - TEFRA CONDUIT BOND FINANCINGAGENDA ITEM March 10, 2015 TO: Honorable Mayor and Members of the City Council THRU: John W. Sibley City Manager FROM: Anna Pehoushekw Acting Assistant Community Development Director I �� ' ��� William M. Kolbo j� /J Finance Director ReviewedNerified By City Manager Finance Direct To Be Presented By: Mary Ellen Laster Cons Calendar _ City Mgr Rpts Council Reports _ Legal Affairs Boards /Cmtes X Public Hearings Admin Reports Plan/Environ 1. SUBJECT Conduit bond financing for Lemon Grove Apartments Project 2. SUMMARY Lemon Grove, LP plans to develop the Lemon Grove Apartments, an 82 -unit affordable housing project to be located at 1148 North Lemon Street. Proposed financing includes bond proceeds from multifamily housing revenue bonds issued by the California Municipal Finance Authority ( "CMFA "). The City is required to conduct a public hearing for the requested bond issuance to comply with State and federal law. The City would have no obligation, liability or responsibility for the project or the repayment of the bonds. 3. RECOMMENDATION Adopt Resolution No. 10850 - A Resolution of the City Council of the City of Orange approving the issuance of the California Municipal Finance Authority Multifamily Housing Revenue Bonds in an aggregate principal amount not to exceed $17,500,000 for the purpose of financing or refinancing the acquisition, construction and equipping of Lemon Grove Apartments and certain matters relating thereto. 4. FISCAL IMPACT There will be no cost to the City for the bonds. The Board of Directors of the California Foundation for Stronger Communities, a California nonprofit 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 ITEM �`, a 1 3/10/15 O Printed on Recycled Paper TEFRA Hearing -Lemon Grove Page 2 local charities. A portion of the issuance fee attributable to the City of Orange will be granted by the CMFA to the General Fund of the City. The grant may be used for any lawful purpose of the City. The Borrower will be the beneficiary of the CMFA's charitable donation through a 25% reduction in issuance fees. 5. STRATEGIC PLAN GOAL(S) Goal 3: Enhance and promote quality of life in the community. Strategy c.: Support and enhance attractive, diverse living environments. 6. GENERAL PLAN IMPLEMENTATION Housing Goal 2.0 Assist in the development of adequate housing to meet the needs of Low and Moderate Income households. 7. DISCUSSION and BACKGROUND Lemon Grove, LP, a partnership of Orange Housing Development Corporation and C &C Development Co., LLC (the "Borrower ") plans to develop the Lemon Grove Apartments, an 82- unit affordable housing project to be located at 1148 North Lemon Street. The Lemon Grove Apartments (the "Project ") would be in the same neighborhood as the 57 -unit Citrus Grove Apartments that were completed by the same development team. The Borrower has requested that CMFA serve as the municipal issuer of the Bonds in an aggregate principal amount not to exceed $17,500,000 of tax - exempt revenue bonds. The proceeds of the Bonds would be used for the purpose of making a loan to the Borrower to finance the acquisition, construction and equipping of the Project, which would 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 Orange is required to conduct a public hearing to comply with the Tax Equity and Fiscal Responsibility Act ( "TEFRA ") and the Internal Revenue Code of 1986, as amended (the "Code "). The TEFRA Hearing provides 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 this TEFRA Hearing, a public hearing notice was published to provide notice 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. The City is a member of CMFA, but would have no financial, legal or moral obligation, liability or responsibility for the project or the repayment of the bonds. Staff is recommending that Council adopt the attached Resolution to authorize CMFA to issue the bonds for the Project and satisfy the requirements of TEFRA, the Code, and California Government Code Section 6500. The proposed entitlements and preliminary award of City funds for the Project are discussed under separate staff reports. 8. ATTACHMENTS Resolution No. 10850 N:/ CDD/ HOUSING /Pmject&U on Gm a /CWAMFRA Hearing 3 -10 -15 ITEM 2 3/10/15 Q Printed on Recycled Paper RESOLUTION NO. 10850 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ORANGE APPROVING THE ISSUANCE OF THE CALIFORNIA MUNICIPAL FINANCE AUTHORITY MULTIFAMILY HOUSING REVENUE BONDS IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $17,500,000 FOR THE PURPOSE OF FINANCING OR REFINACING THE ACQUISITION, CONSTRUCTION AND EQUIPPING OF LEMON GROVE APARTMENTS AND CERTAIN OTHER MATTERS RELATING THERETO WHEREAS, Lemon Grove, LP, a California limited partnership (the "Borrower "), has requested that the California Municipal Finance Authority (the "Authority ") participate in the issuance of one or more series of revenue bonds issued from time to time, including bonds issued to refund such revenue bonds in one or more series from time to time, in an aggregate principal amount not to exceed $17,500,000 (the "Bonds ") for the acquisition, construction and equipping of an 82 -unit multifamily rental housing project located at 1148 North Lemon Street, Orange, California, generally known as Lemon Grove Apartments (the "Project ") and operated by Advanced Property Services, LLC; and WHEREAS, pursuant to Section 147(f) of the Internal Revenue Code of 1986 (the "Code "), the issuance of the Bonds by the Authority must be approved by the City of Orange (the "City ") because the Project is to be located within the territorial limits of the City; and WHEREAS, the City Council of the City (the "City Council ") is the elected legislative body of the City and is one of the "applicable elected representatives" required to approve the issuance of the Bonds under 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 issuance of the Bonds by the Authority; NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Orange as follows: Section 1 . The foregoing recitals are true and correct. Section 2 . The City Council hereby approves the issuance of the Bonds by the Authority. 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 purposes of (a) Section 147(f) of the Code by the applicable elected representative of the governmental unit having jurisdiction over the area in which the Project is to be located, in accordance with said Section 147(f) and (b) Section 4 of the Agreement.