HomeMy WebLinkAbout10-16-2018 Item 13 - Housing Authority conduit financing - TEFRA 172 affordable housing units Meeting Date: 10/16/2018
FROM: Michael Codron, Community Development Director
Prepared By: Cara Vereschagin, Assistant Planner
SUBJECT: CONDUIT FINANCING FOR THE HOUSING AUTHORITY OF THE CITY
OF SAN LUIS OBISPO FOR THE ACQUISITION AND REHABILITATION
OF 172 AFFORDABLE HOUSING UNITS LOCATED IN THE CITY
RECOMMENDATIONS
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 1896, as amended
(the “Code”); and
2. Adopt a resolution allowing the issuance of a tax-exempt obligation by the Housing
Authority of the City of San Luis Obispo (HASLO), for the purpose of providing financing
for the acquisition and rehabilitation of various multifamily rental housing facilities located
in the City (the “Project”), in order to preserve existing affordable housing; 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.
DISCUSSION
Background
The Housing Authority of the City of San Luis Obispo (the “Authority”) is requesting that the
City Council of the City of San Luis Obispo (the “City”) hold a public hearing regarding the
issuance 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 Notice as the “Bonds”) in one or more series in an
aggregate amount of approximately $62,000,000. The proceeds of the Bonds will be used to pay
certain expenses incurred in connection with the issuance of the Bonds and to finance the
acquisition and rehabilitation of the following multifamily rental housing facilities:
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Item 13
Current Name
of Facility Location of Facility Number of Rental
Housing Units
King-South-
Branch
448 South Street, 441 Branch Street and
2173 King Street, San Luis Obispo, CA 8
Torro Gardens 1600 Toro Street, San Luis Obispo, CA 20
Hathway
Apartments 508-520 Hathway Street, San Luis Obispo, CA 20
Highland
Apartments 478-480 High Street, San Luis Obispo, CA 10
Palm View
Apartments
11650-11690 Los Osos Valley Road, San Luis
Obispo, CA 20
Leff Street
Apartments 456-493 Leff Street, San Luis Obispo, CA 20
High Street 228 High Street, San Luis Obispo, CA 6
Loma Vista
Apartments 2929 Augusta Street, San Luis Obispo, CA 16
Harris 2126 Harris Street, San Luis Obispo, CA 3
Royal Way 1497 Royal Way, San Luis Obispo, CA 8
Southwood 1240 Southwood Drive, San Luis Obispo, CA 3
Upham 711 Upham Street, San Luis Obispo, CA 3
Puerta Del Sol 4280 South Higuera, San Luis Obispo, CA 15
Arbor Place 1172 Leff Street, 1175 Islay Street and
1635 Toro Street, San Luis Obispo, CA 20
TOTAL 172
The Housing Authority is committed to providing much needed additional affordable housing in
the City of San Luis Obispo. Preservation of existing affordable housing is identified as a key
implementation strategy in the City’s affordable housing program and adopted Housing Element .
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 investors 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 t hrough its
related entity San Luis Obispo Non-profit Housing Corporation (SLONP). The facilities to be
financed are to be owned by a California limited partnership (the “Borrower”) to be formed by
SLONP, and the facilities will be operated by the Authorit y or another entity selected by the
Borrower. 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 interest. The
project will feature an affordability requirement for a minimum of 55 years. All or a portion of
the rental units in the housing facilities will be rented to persons and families of low or very low
income. The principal amount of the Bonds allocable to each respective facility will be
determined prior to the date of issuance of the Bonds, but will not exceed $10,0 00,000 as to any
one facility.
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Item 13
No City Liability for the Financing
There is no City liability in approving this financing arrangement for the benefit of the Project; a
t ransaction generally referred to as “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 payments 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 of 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 po licies, 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 o f this evaluation and recommending approval of
appropriate financing documents if warranted.
City’s Past Experience with Conduit Housing Bonds
The City has approved thirteen “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 (“Parkwood Village”).
2. 1998. 30-unit development affordable for seniors and persons with disabilities located at
611 Brizzolara Street.
3. 1999. 122-unit apartment development by the De Vaul Ranch Company, consisting of 26
units will be affordable: 24 units for “very-low” and 2 units for “moderate” income
households.
4. 2002. 19-unit senior apartment development at 433 Pacific Street (“Carmel Street
Apartments”).
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”).
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10. 2015. Rehabilitation of 55 affordable rental units located at 1092 Orcut t Road, 1102
Ironbark, and 1363 Pismo Street.
11. 2016. 46-unit affordable apartment development at 3680 Broad Street (“Iron Works”).
12. 2018. 36-unit affordable apartment development at 3175 Violet Street (“Courtyard at the
Meadows”).
13. 2018. Rehabilitation of 107 affordable rental units for seniors located at 3000 Augusta
Street (“Judson Terrace Homes”)1.
Next Steps
After the TEFRA public hearing, adoption of the Resolution of the Council approving the
issuance of the Bonds, and approval of the Borrower’s application for tax-exempt financing, the
Borrower can expect to receive the bond allocation in Fall 2018. There will be no further actions
required by the City.
ENVIRONMENTAL REVIEW
The project is exempt from environmental review per Section 15061 (b)(3) General Rule of the
CEQA Guidelines. The project is an action to award funding.
FISCAL IMPACT
The Bonds to be issued for the Pro ject 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.
ALTERNATIVES
1. Do not approve the issuance of financing for the benefit of the multifamily residential
facilities. Due to the lack of liability for repayment of financing by the City, this option is
not recommended.
2. Defer consideration of the request. Due to the critical need for tax exempt bond financing to
complete the acquisition and rehabilitation of the Project , this option is not recommended.
Attachments:
a - DRAFT Resolution
1 There have been 162 affordable units preserved and 493 affordable units created with conduit funding in the City
of San Luis Obispo since 1985.
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Item 13
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 ACQUISITION AND REHABILITATION OF
VARIOUS MULTIFAMILY RENTAL HOUSING FACILITIES LOCATED
IN THE CITY IN ORDER TO PRESERVE EXISTING AFFORDABLE
HOUSING
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 been advised that the San Luis Obispo Nonprofit Housing
Corporation intends to establish a California limited partnership (the “Borrower”) that will acquire
and rehabilitate various multifamily rental housing facilities identified in “Exhibit A” to this
Resolution (referred to in this Resolution collectively as the “Housing Facilities”); 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 approximate amount of $62,000,000, and a loan of the
proceeds of the Bonds to the Borrower; and
WHEREAS, all or a portion of the rental housing units in the Housing Facilities 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 Section 147(f) of the Code requires that the “applicable elected
representative” with respect to the Authority approve the issuance by the Aut hority of the Bonds
following the holding of a public hearing with respect thereto; and
WHEREAS, the Authority has determined that the Council of the City is the “applicable
elected representative” to approve the issuance by the Authority of the Bonds because all of the
Housing Facilities are located within the City; and
WHEREAS, notice of a public hearing by the Council regarding the financing of the
Housing Facilities has been duly given as required by the Code, and 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 Facilities, including the Authority's
issuance of the Bonds and subsequent lending of the proceeds thereof to the Borrower to pay costs
of the acquisition and rehabilitation by the Borrower of the Housing Facilities; and
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Item 13
Resolution No. _____ (2018 Series) Page 2
R ______
WHEREAS, the City will have no liability or responsibility related to the repayment or
administration of the Bonds, and the issuance of the Bonds and the financing of the Housing
Facilities 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 by the Council of the City of San Luis Obispo
declares as follows:
SECTION 1. Approval of Issuance of Bonds. The Council of the City of San Luis Obispo
hereby approves the issuance of the Authority of the Bonds for purposes of the Code.
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Item 13
Resolution No. _____ (2018 Series) Page 3
R ______
SECTION 2. Environmental Determination. The Council of the City of San Luis Obispo
has determined that the above action will not have a significant impact on the environment, as
defined by §15061(b)(3) of the California Environmental Quality Act and is e xempt from
environmental review.
Upon motion of _______________________, seconded by _______________________,
and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _____________________ 2018.
____________________________________
Mayor Heidi Harmon
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, this ______ day of ______________, _________.
____________________________________
Teresa Purrington
City Clerk
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Item 13
Resolution No. _____ (2018 Series) Page 4
R ______
EXHIBIT A
HOUSING FACILITIES TO BE FINANCED
Current Name
of Facility Location of Facility Number of Rental
Housing Units
King-South-
Branch
448 South Street, 441 Branch Street and
2173 King Street, San Luis Obispo, CA 8
Torro Gardens 1600 Toro Street, San Luis Obispo, CA 20
Hathway
Apartments 508-520 Hathway Street, San Luis Obispo, CA 20
Highland
Apartments 478-480 High Street, San Luis Obispo, CA 10
Palm View
Apartments
11650-11690 Los Osos Valley Road, San Luis
Obispo, CA 20
Leff Street
Apartments 456-493 Leff Street, San Luis Obispo, CA 20
High Street 228 High Street, San Luis Obispo, CA 6
Loma Vista
Apartments 2929 Augusta Street, San Luis Obispo, CA 16
Harris 2126 Harris Street, San Luis Obispo, CA 3
Royal Way 1497 Royal Way, San Luis Obispo, CA 8
Southwood 1240 Southwood Drive, San Luis Obispo, CA 3
Upham 711 Upham Street, San Luis Obispo, CA 3
Puerta Del Sol 4280 South Higuera, San Luis Obispo, CA 15
Arbor Place 1172 Leff Street, 1175 Islay Street and
1635 Toro Street, San Luis Obispo, CA 20
TOTAL 172
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Item 13
THENewspaper of the Central Coast
MBUNE
3825 South Higuera • Post Office Box 112 • San Luis Obispo, C
In The Superior Court of The State of California
In and for the County of San Luis Obispo
AD #3877071
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 am 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;
OCTOBER 1, 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 419139 under the Government Code
of the State of California.
I certify (or declare) under the penalty of perjury that the
foregoing is
ii�s�t�rue and co/rrj�ejctt��/�,%��
(Si tore of Principal Clerk)
DATE: OCTOBER 1, 2018
AD COST: $539.40
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CITY
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SAN 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, October
16, 2018, at 6:00 p.m., or as soon thereafter as the matter may be heard, in the City Hall Council Chamber, 990
Palm Street, San Luis Obispo, California, relative to the following:
TAX AND EQUITY FISCAL RESPONSIBILITY ACT FRA HEARING FOR THE HOUSING AUTHORITY OF
THE CITY OF AN LUIS OBISPO REGARDING ISSU E OF A TAX-E][EMPT OBLIGATION TO FINAIkCE
THE ACOUISMON AND REHA BILITATION OF 172 AFFORDABLE HOUSING UNITS LOCA IN E CITY.
A public hearing as required by Section 147(f) of the Internal Revenue Code of 1986 Wit be held with respect to
the proposed issuance by the Housing Authority of the City of San Luis Obispo (the "Authority") of debt obligations
(which may in the form of a loan evidenced by a note or tax-exempt revenue bonds, and referred to in this Notice
as. the "Bonds") in one or more series in an aggregate amount of approximately $62,000,000. The proceeds of the
Bonds will be used to pay certain expenses incurred in connection with the issuance of the Bonds and to finance
the acquisition and rehabilitation of the following multifamily rental housing facilities:
Current Name Location of Facility Number of Rental
of Facility Housing, Units
King -SWI -{-Branch 448 South Street, 441 Branch Street and 2173 King Street,
San Luis Obispo, CA 8
Torre Gardens 1600 Toro Street, San Luis Obispo, CA 20
Hathway Apartments 508-520 Hathway Street, San Luis Obispo, CA 20
Highland Apartments 478-480 High Street, San Luis Obispo, CA 10
Palm View Apartments 11650-11690 Los Osos Valley Road, San Luis Obispo, CA 20
Leff Street Apartments 456-493 Leff Street, San Luis Obispo, CA 20
High Street 228 High Street, San Luis Obispo, CA 6
Loma Vista Apartments 2929 Augusta Street, San Luis Obispo, CA 16
Harris 2126 Harris Street, San Luis Obispo, CA 3
Royal Way 1497 Royal Way, San Luis Obispo, CA 8
Southwood 1240 Southwood Drive, San Luis Obispo, CA 3
Upham 711 Upham Street, San Luis Obispo, CA 3
Puerta Del Sol 4280 South Higuera, San Luis Obispo, CA 15
Arbor Place 1172 Leff Street, 1175 Islay Street and 1635 Toro Street,
San Luis Obispo, CA 20
TOTAL 172
The facilities to be financed are to be owned by a Calffomfa Limited partnership (ft "Borrower) to be formed by
the San Luis Obispo Nonprofit Housing Corporatiori, and the facilities will be operated by the Authority or another
entity selected by the Borrower. All or a portion of the rental units in Me housing fatalities will be rented to persons
and famltie8 of low or very low income. The p0ricipal amount of the Bonds allocable to each respective faculty will
be determined prior to the date of issuance of the Bonds, but wilt not exceed $10,00,000 as to any one facility.
e Bonds and the obligation to pay principal thereof and interest thereon and any redemption premium with re-
spect thereto, do not constitute indebtedness or an obligation of the Authority, and the City of San Luis Obispo,
the State of California or any political subdivision thereof, within the meaning of any constitutional or statutory
debt limitation, or a charge against the general credit or taxing powers of any of them, but will be payable solely
from certain revenues duly pledged therefor and generally representing amounts paid by the Borrower.
Interested persons wishing to express their views on the issuanoe of the Bonds or on the nature and location of
the housing tacifities proposed to be irnanced may attend the public hearing or, prior to the time of the hearing,
sdbmit written cemments to the City Clerk at citycie rk Oslocity.org or 890 Palm StreeL San Luis Obispo, CA
93401.
Additional information concerning the housing facilities to be financed may be obtained from Ken Litzinger, Oirec-
tar of Finance and Chief Financial Officer of the Authority, telephone number (805) 594-5304.
The City Council may also hold other hearings or discuss other business items before or after the item described
above. It you challenge the proposed Bonds in court, you may be limited to raising only those issues you or some-
one else raised at the public hearing described in this notice, or in written correspondence delivered to the City
Councit at, or prior to, the public hearing.
Reports for this meeting will be available for review in the City Clerk's Office and online atwww.slocitv.org on Wed-
nesday, October 10, 2018. Please call the City Clerk's Office at (805) 781-7100 for more information. The City
Council meeting will be televised live on Charter Cable Channel 20 and live streaming on www.slocitv.org.
Teresa Purrington
City Clerk -
City of San -Luis Obispo
October 1, 2018 3877071