HomeMy WebLinkAbout02-06-2018 Item 01 TEFRA For Courtyard at the Meadows Meeting Date: 2/6/2018
FROM: Michael Codron, Community Development Director
Prepared By: Cara Vereschagin, Planning Technician
SUBJECT: REQUEST FROM THE HOUSING AUTHORITY OF THE CITY OF SAN
LUIS OBISPO REGARDING ISSUANCE OF A TAX-EXEMPT LOAN TO
DEVELOP 36 AFFORDABLE HOUSING UNITS AT 3175 VIOLET STREET
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 ; and
2. Adopt a resolution allowing the issuance of a tax-exempt loan by the Housing Authority of
the City of San Luis Obispo to develop 36 affordable housing units at 3175 Violet Street.
DISCUSSION
Background
The Housing Authority of the City of San Luis Obispo (the “Authority”) is requesting that the
Council hold a public hearing regarding the issuance of a tax-exempt loan to develop Courtyard
at the Meadows, 36 affordable housing units located at 3175 Violet Street.
Although there is no financial participation (or liability, direct or indirect) by the City in
approving the issuance of this “conduit” financing, Council conduct of a public hearing and
approval of the reissuance is required under federal regulations for tax-exempt financing.
The Housing Authority is committed to providing much needed ad ditional affordable housing in
the City of San Luis Obispo. The primary funding source for this project will be low income
housing tax credits awarded by the California Tax Credit Allocation Committee (TCAC). These
tax credits are then purchased by invest ors who become a limited partner. California statue does
not allow Housing Authorities to be a party in these partnerships, so the Housing Authority will
hold its interest through its related entity San Luis Obispo Non-profit Housing Corporation
(SLONP). SLONP will serve as the sole Managing General Partner for Courtyard at the
Meadows. The partnerships have a 15-year compliance period over which the tax credits are
earned. After the 15 years, the limited partner has the option to seek a buyer for its int erest. The
project will feature an affordability requirement for a minimum of 55 years.
Project Summary
1. Courtyard at the Meadows will consist of 100% of the units to be rented to households at
60% Area Median Income and below for a minimum of 55 years. T he project consists of
36 units: 9 one bedroom units, 18 two bedroom units, and 9 three bedroom units.
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2. Estimated total development costs are projected to be $14.9 million. Of this, it is
anticipated that roughly $10 million in tax exempt bond financing will be utilized to
finance the project development.
3. The issuance of the Bond requires that the Council conduct a public hearing regarding the
financing of the Project under the Tax Equity and Fiscal Responsibility Act of 1982
(“TEFRA”), and pursuant to the requirements of the Internal Revenue Code of 1986. The
TEFRA public hearing allows Council to adopt a resolution approving the issuance by
the Authority of the Bonds, in order to build and maintain the housing facilit y.
No City Liability for the Financing
There is no City liability in approving the issuance of conduit financing. The bonds are payable
solely from the payments by the Borrower on a loan made to it (the “Borrower Loan”) by the
Authority from the proceeds of the Bonds. The rental payme nts by tenants in the Project are the
source of revenue used by the Borrower to repay the Borrower Loan. The City has no financial,
legal, or moral obligation, liability or responsibility for the Project or for the repayment of the
Bonds or the repayment o f the Borrower Loan. The documents for the Bonds clearly provide that
the Bonds are payable solely from payments on the Borrower Loan made by the Borrower.
Outside of holding this hearing and adopting the required resolution, no other participation or
activity of the City with respect to the bonds will be required.
City’s Conduit Financing Policy
While the Council is not obligated to approve this request, it would be consistent with past City
actions regarding conduit financing.
Under the City’s debt financing and management policies, consideration of a request for conduit
financing is generally a two -step process:
1. First asking the Council if they are interested in considering the request and establishing
the ground rules for evaluating it.
2. And then returning with the results of this evaluation and recommending approval of
appropriate financing documents if warranted.
City’s Past Experience with Conduit Housing Bonds
The City has approved eleven “conduit” housing bond issues in the past as reflected in the
following summary. There have been no financial difficulties with any of these bond issues.
1. 1985. 168-unit apartment development on Southwood Drive (refinanced in 1993).
2. 1998. 30-unit development (all affordable for seniors and persons with disabilities) on
Brizzolara Street.
3. 1999. 122-unit apartment development by the De Vaul Ranch Company, of wh ich 26 units
will be affordable: 24 for “very-low” and 2 for “moderate” income households.
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4. 2002. 19-unit senior apartment development at 433 Pacific Street (Pacific and Carmel).
5. 2005. 40 affordable one-bedroom units for seniors as well as one manager’s unit in an
existing historic single-family residence at 2005 Johnson Avenue (“Del Rio Terrace”).
6. 2009 and 2011. 8-unit housing project at 1468 East Foothill Boulevard for the University
Board of the Santa Barbara Presbytery.
7. 2012. 120-unit apartment project affordable to low and very-low income households located
at 1550 Madonna Road.
8. 2013. 19-unit apartment project affordable rental apartment facility for seniors located at
433 Pacific (“Carmel Street Apartments”).
9. 2013. 40-unit affordable rental apartment facility for seniors located at 2005 Johnson
Avenue (“Del Rio Terrace”).
10. 2015. Rehabilitation of 55 affordable rental units located at 1092 Orcutt Road, 1102
Ironbark, and 1363 Pismo Street.
11. 2016. 46-unit affordable apartment development at 3680 Broad Street (“Iron Works”).
Next Steps
After the TEFRA public hearing and adoption of the Resolution of the Council approving the
is suance of the Bonds, the Authority will apply for low income housing tax credits and tax
exempt bonds in March of 2018. There will be no further actions required by the City.
ENVIRONMENTAL REVIEW
The project is exempt from environmental review per Sectio n 15061 (b)(3) General Rule of the
CEQA Guidelines. The project is an action to award funding. Courtyard at the Meadows was
determined to be consistent with the Mitigated Negative Declaration of Environmental Impact of
the Margarita Area Specific Plan by the City Council on April 15, 2014.
FISCAL IMPACT
There are no fiscal impacts to the City associated with this matter. As noted above, the City has
no liability, directly or indirectly, for the financing.
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ALTERNATIVES
1. Do not approve the issuance of bo nds by the Housing Authority. The project has already
received all necessary entitlements, as well as multiple City loan commitments. Due to
the lack of liability for repayment of Bonds by the City, this option is not recommended.
2. Defer consideration of the request. Due to the critical need for tax exempt bond
financing in order to construct the apartments, this option is not recommended.
Attachments:
a - TEFRA Resolution_Courtyard
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R _______
RESOLUTION NO. ______ (2018 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, APPROVING THE INCURRING OF A TAX
EXEMPT OBLIGATION BY THE HOUSING AUTHORITY OF THE CITY
OF SAN LUIS OBISPO FOR THE PURPOSE OF PROVIDING
FINANCING FOR THE CONSTRUCTION OF COURTYARD AT THE
MEADOWS.
WHEREAS, the Housing Authority of the City of San Luis Obispo (the "Authority") is
authorized by Chapter 1 of Part 2 of Division 24 of the Health and Safety Code of the State of
California, as amended (the "Act"), to incur indebtedness and to make loans for housing purposes
specified in the Act; and
WHEREAS, the Authority has expressed an interest in establishing a California limited
partnership (the “Borrower”) and in assist ing the Borrower in constructing the Courtyard at the
Meadows affordable rental project at 3175 Violet Street (referred to in this Resolution as the
“Housing Facility”); and
WHEREAS, such assistance will involve the issuance by the Authority of debt obligations
(which may be in the form of a loan evidenced by a note or tax-exempt revenue bonds, and referred
to in this Resolution as the “Bonds”) in the amount not to exceed $10,000,000, and a loan of the
proceeds of the Bonds to the Borrower; and
WHEREAS, all housing units in the Housing Facilit y will be rented to persons and
families of low or very low income as required by the Act and the Internal Revenue Code of 1986,
as amended (the "Code"); and
WHEREAS, the Bonds will be considered to be a "qualified exempt facility bonds" under
Section 142(a) of the Code; and
WHEREAS, Section 147(f) of the Code requires that the "applicable elected
representative" with respect to the Authority approve the issuance by the Authority of the Bonds
following the holding of a public hearing with respect thereto; and
WHEREAS, the Authority has determined that the City Council is the "applicable elected
representative" to approve the issuance by the Authority of the Bonds because the Housing Facilit y
is located within the City; and
WHEREAS, notice of a public hearing by the Council regarding the financing of the
Housing Facility has been duly given as required by the Code; and
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Resolution No. ______ (2018 Series) Page 2
R ______
WHEREAS, the Council has held the public hearing at which all interested persons were
given an opportunity to be heard on all matters relative to the location, operation and financing of
the Housing Facilit y, including the Authority's issuance of the Bonds and subsequent lending of
the proceeds thereof to the Borrower to pay costs of the construction by the Borrower of the
Housing Facilit y; and
WHEREAS, the City will not be a party to any of the agreements or other documents
related to the Bonds and the financing of the Housing Facilit y, the City will have no liability or
responsibility relat ed to the repayment or administration of the Bo nds, and the issuance of the
Bonds and the financing of the Housing Facilit y will not impose any legal, financial or moral
obligation on the City; and
WHEREAS, it is in the public interest, for the public benefit and in furtherance of the
public purpose of the City that the Council approve the issuance by the Authority of the Bonds for
the aforesaid purposes.
NOW, THEREFORE, BE IT RESOLVED that the Council of the City of San Luis
Obispo does declare, determine and order as follows:
SECTION 1. The Council of the City of San Luis Obispo hereby approves the issuance
by the Authority of the Bonds for purposes of the Code.
SECTION 2. This Resolution shall take effect immediately upon its adoption.
Upon motion of Council Member _______________ seconded by Council Member
_______________ and on the following vote:
AYES:
NOES:
ABSENT:
The foregoing Resolution was adopted this ______ day of ____________ 2018.
Mayor Heidi Harmon
ATTEST:
Carrie Gallagher
City Clerk
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Resolution No. ______ (2018 Series) Page 3
R ______
APPROVED AS TO FORM:
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, this ______ day of ______________, _________.
______________________________
Carrie Gallagher
City Clerk
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JAN 242018
EI Newspaper of the Central Coast�� -=-.ea, 6-.��1MBLNE
3825 South Higuera • Post Office Box 112 • San Luis Obispo, Cali
In The Superior Court of The State of California
In and for the County of San Luis Obispo
AD #3485188
CITY OF SAN LUIS OBISPO
OFFICE OF THE CITY CLERK
STATE OF CALIFORNIA
SS.
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 and not
interested in the above entitled matter; I ain now, and at
all times embraced in the publication herein mentioned
was, the principal clerk of the printers and publishers of
THE TRIBUNE, a newspaper of general Circulation,
printed and published daily at the City of San Luis
Obispo in the above named county and state; that notice
at which the annexed clippings is a true copy, was
published in the above-named newspaper and not in any
supplement thereof - on the following dates to wit;;
JANUARY 20, 2018 that said newspaper was duly and
regularly ascertained and established a newspaper of
general circulation by Decree entered in the Superior
Court of San Luis Obispo County, State of California, on
June 9, 1952, Case #19139 under the Government Code
of the State of California.
I certify (or declare) under the penalty of perjury that the
foregoing is true and correct.
y ��-
(Sig ure of Principal Clerk)
DATE: JANUARY 20, 2018
AD COST: $348.00
Crff OF
S4IIbL m OBISPO
SAN LUIS OBISPO CITY COUNCIL
NOTICE OF PUBLIC HEARING
San Luis Obispo City Council invites all interested persons to
od a public hearing on Tuesday, February 6, 2018, at 4:00
in the City Hall Council Chamber, 990 Palm Street, San
Obispo, California, relative to the following:
NOTICE IS HEREBY GIVEN that on February 6, 2018, a public
hearing as required by Section 147(f) of the Internal Revenue
Code of 1986 will be held by the City Council of the City of San
Luis Obispo (the "City") with respect to the proposed issuance by
the Housing Authority of the City of San Luis Obispo (the "Authori-
ty") of debt obligallons (W tch may be In the form of a loan evi-
denced by a note or tax-exempt revenue bonds, and, referred to it
this Notice as the 'Bonds") in one or more series in an aggregate
amount not to exceed $10,000,000. The proceeds of the Bonds
Will be used to: (1) finance the acquisition and construction of a 36
unit mulit-famlly rental housing facility to be located at 3175 Violet
Street. in the City, to be known as Courtyard at ft Meadows; and
(2) pay certain expenses incurred in connection with the Issuance
of the Bonds. The facilities to be financed are to be owned by a
California limited partnershlp (the ^Borrower") 10 be formed by the
Authorlly, and the faollifies will be operated Initially by the AuthOri-
ly a another entily salboled by the BOrraWar. All a a portion of the
rental units in the heusing faclltties wilt be rented to persons and
lamllies of low or very low Income.
e Bonds and the obligation to pay principal of and interest there -
.and any redemption premium with respect thereto will not con-
tule an Indebledness or an obligation of the Authority, the City
San Lu Is Obispo, the Slate of California or any poI[llcal subdivl-
in thereof wlthln the meaning Of any constitutional or statutory
bt Ilmitation, or a charge against the general credit or taxing
wars of any of Them, but will be payable solely from certaln reve-
es duly pledged therefor and generally representing amounts
Id by the Borrower.
hearing will Commence at 4:00 p.m, or as soon thereafter as
matter can be has rd, and will be haid In the City Council
embers, located at 990 Palm Street, San Luis Obispo, Callfor-
Interested persons wishing to express their views on the Is -
rice of the Bonds or on the nature and location of the housing
files proposed to be financed may attend the public hearing or,
r to the time of the hearing, submit written comments.
Iditional information concerning the housing facilities to be fi-
need may be obtained from Ken Litzinger, Director of Finance
d Chief FiAanclal Officer of the Authority, telephone number
D5) 584.6304; and any written comments should be sent prior to
public hearing to the City Clerk of the City of San Luis Obispo,
990 Palm Street, San Luis Obispo, California 93401. '
City Council may also discuss other hearings or business
s before or after the items listed above. If you challenge the
osed project in court, you may be limited to raising only those
as you or someone else raised at the public hearing descri-
in this notice, or in written correspondence delivered to the
Council at, or prior to, the public hearing.
)arts for this meeting will be ovallable for review in the City
rWs Office and oniIne at www.s1A%i ..qg on Wednesday, Janu-
$1, 2018. Please Call the Clly Clerk's Office at (805) 781-7100
more information. The City Council meeting will be televised
on Charter Cable Channat 20 and live at reaming on wyvw.sfo-
[e Gallagher
Clerk
of San Luis Obispo
aiy 20, 2018 3485188
REQUEST FROM THE HOUSING AUTHORITY OF THE CITY OF SAN LUIS OBISPO REGARDING ISSUANCE OF A TAX-EXEMPT LOAN TO DEVELOP 36 AFFORDABLE HOUSING UNITS AT 3175 VIOLET STREETCity CouncilFebruary 6, 2018102-06-2018 Item 1 - Staff Presentation
Recommendation1.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; and2.Adopt a resolution entitled, “A Resolution of the City Council of the City of San Luis Obispo, California, approving the incurring of a tax exempt obligation by the Housing Authority of the City of San Luis Obispo for the purpose of providing financing for the construction of Courtyard at the Meadows,” to develop 36 affordable housing units at 3175 Violet Street. 202-06-2018 Item 1 - Staff Presentation
BackgroundThe Housing Authority has requested that the City Council hold a public hearing regarding the issuance of a tax-exempt loan to develop Courtyard at the Meadows, 36 affordable housing units located at 3175 Violet StreetTEFRA hearing is required under federal regulations for tax-exempt financingThere is no City liability in approving the issuance of conduit financing302-06-2018 Item 1 - Staff Presentation
Project Summary36 affordable rental housing units (including 1 manager unit)9 one-bedroom units18 two-bedroom units9 three-bedroom100% affordable to very-low and low income households (50%-60% of Area Median Income)31 units 60% AMI (low income)4 units 50% AMI (very-low income)Units will remain affordable for a minimum of 55-yearsEstimated total development costs are $12.3 millionAnticipated up to $10 million in tax-exempt bond financing will be utilized to develop Courtyard at the Meadows402-06-2018 Item 1 - Staff Presentation
Past TEFRA ExperienceCity has approved eleven similar resolutions allowing tax-exempt conduit financing since 1985Request is consistent with past Council action and General Plan Housing Element policiesNo financial difficulties with past projects502-06-2018 Item 1 - Staff Presentation
Past TEFRA ExperienceIron Works Apartments (3680 Broad Street)46 affordable rental unitsCurrently under constructionAwarded bonds in 2016Laurel Creek Apartments (1092 Orcutt Road)Rehabilitation of 55 affordable rental unitsPlaced into service in June 1994; awarded bonds in 2015 $1,200,000 in capital improvements neededDel Rio Terrace (2005 Johnson Avenue)40 affordable rental units for seniorsAwarded bonds in 2013602-06-2018 Item 1 - Staff Presentation
Recommendation1.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; and2.Adopt a resolution entitled, “A Resolution of the City Council of the City of San Luis Obispo, California, approving the incurring of a tax exempt obligation by the Housing Authority of the City of San Luis Obispo for the purpose of providing financing for the construction of Courtyard at the Meadows,” to develop 36 affordable housing units at 3175 Violet Street. 702-06-2018 Item 1 - Staff Presentation