HomeMy WebLinkAboutItem 7b - Tax Equity and Fiscal Responsibility Act (TEFRA) Hearing Regarding the Issuance of a Tax-Exempt Debt Obligation to Finance Affordable Housing Construction at 3750 Bullock Lane Item 7b
Department: Community Development
Cost Center: 4003
For Agenda of: 5/3/2022
Placement: Public Hearing
Estimated Time: 15 minutes
FROM: Michael Codron, Community Development Director
Prepared By: Owen Goode, Assistant Planner
SUBJECT: TAX EQUITY AND FISCAL RESPONSIBILITY ACT (TEFRA) HEARING
REGARDING THE ISSUANCE OF A TAX-EXEMPT DEBT OBLIGATION
TO FINANCE CONSTRUCTION OF 68 AFFORDABLE HOUSING UNITS
AT 3750 BULLOCK LANE
RECOMMENDATION
1. Conduct a public hearing under the Tax Equity and Fiscal Responsibility Act
(“TEFRA”) of 1982 and pursuant to the requirements of the Internal Revenue Code of
1986 (the “Code”); and
2. Adopt a Resolution entitled, “A Resolution of the City Council of the City of San Luis
Obispo, California, approving the issuance of Revenue Bonds by the Calif ornia
Municipal Finance Authority in an aggregate principal amount not to exceed
$30,000,000 to finance an affordable rental housing facility for the benefit of Tiburon
Place, L.P., and certain other matters relating thereto” allowing the issuance of the
Bonds by the California Municipal Finance Authority (“CMFA”) for the benefit of
People’s Self-Help Housing Corporation (the “Sponsor”), on behalf of Tiburon Place,
L.P., a California limited partnership, or an ownership entity to be created by the Sponsor
or an affiliate of the Sponsor (such limited partnership or other ownership entity, 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 California
Government Code Section 6500, et seq.
DISCUSSION
Background
The Borrower requested that the CMFA serve as the municipal issuer of the bonds in an
aggregate principal amount not to exceed $30,000,000 of tax-exempt revenue bonds (the
“Bonds”). The proceeds of the Bonds will be used to finance the acquisition, development,
construction, and equipping of a 68-unit affordable rental housing facility for low-income
households to be owned and operated by the Borrower and located at 3750 Bullock Lane
in the City of San Luis Obispo, California (the “Project”).
Page 389 of 395
Item 7b
For all or a portion of the Bonds to qualify as tax-exempt bonds, the City of San Luis
Obispo (the “City”) must conduct a 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. 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. The City Council is an “applicable elected representative” of the City for purposes
of TEFRA.
Previous Council or Advisory Body Action
On December 11, 2019, the Planning Commission reviewed the development of a three -
story affordable housing project consisting of 68 residential units, including a density
bonus of 40 percent and an affordable housing incentive to allow for a maximum height
of 45 feet where 35 is normally required (PC Report 12.11.19). The Planning Commission
found the Project consistent with the City’s General Plan and approved the Project (vote
5-0-2, Meeting Minutes).
Policy Context
Pursuant to Government Code Section 5852.1, CMFA is obligated to obtain and provide
public disclosure of a good faith estimate of the cost of the Bonds, including the true
interest costs of the Bonds, the finance costs of the Bonds, the amount of proceeds
required for the sale of the Bonds, and the total payment amount of the Bonds.
Public Engagement
Public comment can be provided to the City Council through written correspondence prior
to the meeting and through public testimony at the meeting. This is an administrative item,
so no outside public engagement was completed.
CONCURRENCE
Concurrence is not required for this item because the City is not liable or responsible for
the issuance of the tax-exempt revenue bonds (the “Bonds”).
ENVIRONMENTAL REVIEW
The adoption of the resolution approving the issuance of the Bonds is exempt from
environmental review per Section 15061(b)(3) of the California Environmental Quality Act
Guidelines because the proposed action is in regard to the financing of an affordable
housing project that has previously been reviewed for environmental compliance, and it
can be seen with certainty that there is no possibility that the issuance of the Bonds will
have a significant effect on the environment beyond those effects which hav e previously
been studied.
Page 390 of 395
Item 7b
FISCAL IMPACT
Budgeted: N/A Budget Year: 2021-22
Funding Identified: N/A
Fiscal Analysis:
Funding
Sources
Total Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund $ $ $ $
State
Federal
Fees
Other:
Total $ $ $ $
The Bonds to be issued by the CMFA 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 and
are to be paid for solely from funds provided by the Borrower.
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 San Luis Obispo it is expected that the portion of the issuance fee
attributable to the City will be granted by the CMFA to the general fund of the City
estimated to be $11,400. Such grant may be used for any lawful purpose of the City.
ALTERNATIVES
1. Do not approve the issuance of bonds by CMFA. All necessary entitlements, as
well a City loan commitment, have previously been approved by the City and the
Project will close escrow shortly. Due to the imminent commencement of the Project,
and the lack of liability for repayment of the Bonds by the Ci ty, this option is not
recommended.
2. Defer consideration of the request. Due to the critical need for tax exempt bond
financing to construct the Project, this option is not recommended.
ATTACHMENTS
A - Draft Resolution approving the Issuance of Tax-Exempt Revenue Bonds by CMFA
Page 391 of 395
Page 392 of 395
R ____
RESOLUTION NO. ____ (2022 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, APPROVING THE ISSUANCE OF REVENUE
BONDS BY THE CALIFORNIA MUNICIPAL FINANCE AUTHORITY IN
AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $30,000,000
TO FINANCE AN AFFORDABLE RENTAL HOUSING FACILITY FOR
THE BENEFIT OF TIBURON PLACE, L.P., AND CERTAIN OTHER
MATTERS RELATING THERETO
WHEREAS, People’s Self-Help Housing Corporation, a California nonprofit
corporation (the “Sponsor”), on behalf of Tiburon Place, L.P., a California limited
partnership, or an ownership entity to be created by the Sponsor or an affiliate of the
Sponsor (such limited partnership or other ownership entity, the “Borrower”), has
requested that the California Municipal Finance Authority (the “Authority”) issue one or
more series of revenue bonds in an aggregate principal amount not to exceed
$30,000,000 (the “Bonds”), including but not limited to revenue bonds issued as part of a
plan to finance the acquisition, development, construction and equipping of a 68 -unit
affordable rental housing facility for low-income households (the “Project”) to be owned
and operated by the Borrower and located in the City of San Luis Obispo, California (the
“City”) at 3750 Bullock Lane; and
WHEREAS, an “applicable elected representative” of the jurisdiction in which the
Project is to be located is required to approve the issuance of the Bonds, after a public
hearing held after reasonable public notice, under Section 147(f) of the Internal Revenue
Code of 1986 (the “Code”); and
WHEREAS, the City Council (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 requiremen t
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, the City will not be a party to any of the Bond documents, the City will
have no liability or responsibility related to the repayment and administration of the Bonds,
and the issuance of the Bonds and the financing of the Project with the proceeds of the
Bonds will not impose any legal, financial or moral obligation on 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 , at which
time an opportunity was provided to interested parties to be heard with respect to the
proposed issuance of the Bonds and financing of the Project; and
Page 393 of 395
Resolution No. _____ (2022 Series) Page 2
R _____
WHEREAS, it is in the public interest, for the public benefit, and in furtherance of
the public purposes of the City that the City Council approve the issuance of the Bonds
by the Authority for the aforesaid purposes.
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of San
Luis Obispo, 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, including but not limited to Bonds issued as part of a plan to finance the facilities
described herein. It is the purpose and intent of the City Council that this resolution
constitutes 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 to be located,
in accordance with said Section 147(f) and (b) Section 4 of the Agreement.
Section 3. The City shall have no responsibility or liability whatsoever with
respect to the Bonds or the Project. The payment of the principal, prepayment premium,
if any, and purchase price of and interest on the Bonds shall be solely the responsibility
of the Borrower. The Bonds shall not constitute a debt or obligation of the City. The
adoption of this Resolution shall not obligate the City to (i) provide any financing to acquire
or construct the Project or to provide any refinancing of the Project; (ii) make any
contribution or advance any funds whatsoever to the Authority; or (i ii) take any further
action with respect to the Authority or its membership therein.
Section 4. 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.
Page 394 of 395
Resolution No. _____ (2022 Series) Page 3
R _____
Section 5. The City Clerk shall forward a certified copy of this Resolution to the
Authority in care of its counsel:
Ronald E. Lee, Esq.
Jones Hall, APLC
475 Sansome Street, Suite 1700
San Francisco, CA 94111
Section 6. This resolution shall take effect immediately upon its adoption.
Upon motion of Council Member _______, seconded by Council Member ______,
and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this ____ day of _______ 2022.
__________________________
Mayor Erica A. Stewart
ATTEST:
__________________________
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
__________________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of
the City of San Luis Obispo, California, on ______________________.
___________________________
Teresa Purrington
City Clerk
Page 395 of 395
1010 Marsh St., San Luis Obispo, CA 93401
(805) 546-8208 . FAX (805) 546-8641
PROOF OF PUBLICATION
(2015.5 C.C.P.)
STATE OF CALIFORNIA,
County of San Luis Obispo,
I am a citizen of the United States and a resident
of the county aforesaid; I am over the age of
eighteen years, and not a party interested in the
above entitled matter. I am the principal clerk
of the printer of the New Times, a newspaper
of general circulation, printed and published
weekly in the City of San Luis Obispo, County
of San Luis Obispo, and which has been
adjudged a newspaper of general circulation by
the Superior Court of the County of San Luis
Obispo, State of California, under the dare of
February 5, 1993, Case number CV72789: that
notice of which the annexed is a printed copy
(set in type not smaller than nonpareil), has been
published in each regular and entire issue of said
newspaper and not in any supplement thereof on
the following dates, to -wit:
cA L\
in the year 2022.
I certify (or declare) under the the penalty of
perjury that the foregoing is true and correct.
Dared at San Luis Obispo, C lifornia, this day
Z of T� . 2022,
9F
Patricia Horton, New Times Legals
Proof of Publication of
00SAN LUIS OBISPO
CITY COUNCIL
NOTICE OF
PUBLIC HEARING
The San Luis Obispo City Council invites all interested
persons to attend a public hearing on Tuesday, May 3, 2022
with Closed Session w 4:30 p.m., followed by the Regular
Meeting et 6.00 p.m., held in the Council Chambers at
City Hall, 990 Palm Street, San Luis Obispo. Please note
that Zoom participation will not be supported, as this
will be an in-pmsen mewing. Meetings can be viewed
remotely on Government Access Channel 20 or streamed
live from the City's YouTube channel at httodlvoumbe slo
�gfii. Public comment, prior to the wart of the meeting, may
be submitted in writing via U.S. Mail delivered m the City
Clerk's office at 990 Palm Street, San Luis Obispo, CA 93401
or by email to emailcouncll®alosev.oro.
PUBLIC HEARING ITEM:
The City Council will hold a Tax Equity and Fscal
Responsibility Act Public Hearing, as required by
Section 1471fl of the Internal Revenue Code of
1966, with respect to the proposed issuance by
the California Municipal Finance Authority of its
revenue bonds in one or more series in an amount
not to exceed S30,000,000, including but not limited to
revenue bonds issued as part at a plan to finance the
acquisition, development, construction and equipping
of a Went affordable rental housing facility for low-
income households, to be located at 3750 Bullock Lane
in the City of San Luis Obispo, California. The facilities
to be owned and operated by Tbumn Place, L.P.,
California limited partnership, or another emayto be
created by People's SeR-Help Housing Corporation.
For more information, you are invited to contect0wen
Goode ofthe Ciry's Community Oevetppment0epamnent
at(8051781-7576 orbit, email ataaoode�slocirvom
The City Council may also discuss other hearings or
business items before or afterthe items listed above. It you
challenge the proposed pralectin court, you may be limbed
to raising only those issues you or someone else raised at
the public hearing described in this notice, or in written
correspondence delivered to the City Council at, or prior
to. the public hearing.
Council Agenda Reports for this meeting will be available
far review one week in advance of the mewing date on
the City's wands, under the Public Meaning Agendas
web page: hap,#wwwsloctimm/guvemmem7mavor-
and-cdv-council/auendas-and-minutes. Please call the
City Clerk's Office at 1805) 791 7100 for more information.
The City Council meeting will be televised live on Charter
Cable Channel 20 and live streaming on the City's YouTube
channel hnol/voutube sln city.
Apnl 21, 2022
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3/17/2015
1
TAX AND EQUITY FISCAL RESPONSIBILITY ACT (TEFRA)
HEARING FOR PEOPLES SELF HELP HOUSING CORPORATION
REGARDING ISSUANCE OF A TAX-EXEMPT DEBT OBLIGATION
TO FINANCE CONSTRUCTION OF 68-UNIT AFFORDABLE
HOUSING RENTAL PROJECT AT 3750 BULLOCK LANE
City Council
May 3, 2022
1
Recommendation
1.Conduct a public hearing under the Tax and Equity
Fiscal Responsibility Act (TEFRA) of 1982 and
pursuant to the requirements of the Internal Revenue
Code of 1986, as amended; and
2.Adopt a resolution allowing the issuance of Revenue
Bonds by the California Municipal Finance Authority
CMFA) to finance the acquisition and construction of
a 68-unit multifamily rental housing facility located in
the City (the Project) for the benefit of Tiburon Place
L.P., such adoption of the resolution is solely for the
purposes of satisfying the requirements of TEFRA, the
Code and the California Government Code Section
6500 et seq.
2
1
2
3/17/2015
2
Background
3
PSHH requested that the City
Council hold a public hearing
regarding the issuance of debt
obligations in an aggregate
principal amount not to exceed
30,000,000 of tax-exempt
revenue bonds.
The proceeds of the bonds will
be used to finance the
acquisition and construction of a
68-unit affordable rental housing
facility at 3750 Bullock Lane.
TEFRA hearing is required
under federal regulations for tax-
exempt financing
California Municipal Finance
Authority (CMFA)
The CMFA is a joint powers authority formed to assist
local governments, non-profit organizations, and
businesses with the issuance of both taxable and tax-
exempt debt
The City will have no financial or legal obligations or
responsibilities with regard to the repayment of the
debt.
4
3
4
3/17/2015
3
Past TEFRA Experience
City has approved fifteen similar resolutions allowing
tax-exempt conduit financing since 1985
Request is consistent with past Council action and
General Plan Housing Element policies
No financial difficulties with past projects
5
Recommendation
1.Conduct a public hearing under the Tax and Equity
Fiscal Responsibility Act (TEFRA) of 1982 and
pursuant to the requirements of the Internal Revenue
Code of 1986, as amended; and
2.Adopt a resolution allowing the issuance of Revenue
Bonds by the California Municipal Finance Authority
CMFA) to finance the acquisition and construction of
a 68-unit multifamily rental housing facility located in
the City (the Project) for the benefit of Tiburon Place
L.P., such adoption of the resolution is solely for the
purposes of satisfying the requirements of TEFRA, the
Code and the California Government Code Section
6500 et seq.
6
5
6
3/17/2015
4
Extra slide
7
Past TEFRA Experience
Iron Works Apartments (3680 Broad Street)
46 affordable rental units
Currently under construction
Awarded bonds in 2016
Laurel Creek Apartments (1092 Orcutt Road)
Rehabilitation of 55 affordable rental units
Placed into service in June 1994; awarded bonds in 2015
1,200,000 in capital improvements needed
Del Rio Terrace (2005 Johnson Avenue)
40 affordable rental units for seniors
Awarded bonds in 2013
Judson Terrace Senior Housing, (3000 Augusta Street)
107-unit multifamily rental housing facility
8
7
8