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Home My WebLink About07/20/1993, 1 - CONSIDERATION OF A REQUEST TO AUTHORIZE THE HOUSING AUTHORITY TO ISSUE $7.9 MILLION IN TAX EXEMPT MORTGAGE REVENUE BONDS TO ALLOW REFINANCING OF A 168-UNIT APARTMENT PROJECT KNOWN AS PARKWOOD VILLAGE, LOCATED AT 1017 - 1045 SOUTHWOOD DRIVE IIIIu^I�II�III�III�Ip 1� � MEETING DATE: � IIII III.IIIII Cof San Luis OBIspo ITEM NUMBER: u COUNCIL AGENDA REPORT / FROM: Arnold Jonas, Community Development Director, By: Jeff Hook,-associate Planner SUBJECT: Consideration of a request to authorize the Housing Authority to issue $7.9 million in tax exempt mortagage revenue bonds to allow refinancing of a 168-unit apartment project known as Parkwood Village, located at 1017 - 1045 Southwood Drive. CAO RECOMMENDATION: Adopt resolution authorizing the Housing Authority to issue the bonds in the aggregate principal amount of $7.9 million as proposed. SITUATION In May 1985, the City Council adopted Resolution No. 5683 authorizing the Housing Authority to issue multi-family housing revenue bonds (Federal National Mortgage Association (FNMA), or "Fannie Mae" program) in the aggregate principal amount not to exceed $10 million to provide tax-exempt financing for the 168-unit Parkwood Apartment Project (sometimes referred to as the "Southwood Apartments"). The bonds were used to finance the acquisition and construction of the apartment project by the owner. In return, the Housing Authority received a committment from the developer to set aside at least 20 percent of the units for low- and moderate-income renters, consistent with Fannie Mae requirements. Since then, the Housing Authority has rented 34 of the apartments to mostly low- income households through the Federal Section 8 rental assistance program. The term of affordability was 10 years, coinciding with the term of the bonds. Due to favorable interest rates, the developer would now like to refinance and retire the existing bonds with a new bond issue that will also be secured by a new FNMA pass-through certificate. As explained in the attached letter from bond counsel, although the Housing Authority is technically the bond-issuing agency, Federal tax law requires that a noticed public hearing be conducted by the elected governing body of the.local jurisdiction. For this bond issue, that body is the San Luis Obispo City Council. This hearing is often referred to as a "TEFRA hearing." Data Summary Address: 1017 - 1045 Southwood Drive Zoning: R-3-PD (Medium-High Density Residential, Planned Development). General Plan: Medium-high density residential Owner: Southwood Project, a California Limited Partnership Agent: Patrick Smith Housing Authority Representative: George Moylan Environmental Determination: Categorically Exempt 11111111111111WJJJ I city Of San LUIS OBISPO IIIIINNe COUNCIL AGENDA REPORT Staff Report Page 2 DISCUSSION From the City's perspective, this is essentially a "housekeeping" item. The City's role is to hold a public hearing on the proposed bond issuance, as required by Federal law. Any public comment then becomes part of the information considered by FNMA. Bond issuance and sale are handled by the Housing Authority and bond counsels. In this role, the Authority is acting as a quasi-independent housing agency as allowed under State law, and the City incurs no cost or indebtedness as a result of bond refinancing. The Housing Authority favors refinancing, and is expected to adopt a resolution in support of the bond issuance. The proposed bond issuance is consistent with General Plan policies which encourage City support for subsidized or rental housing affordable to low- and moderate-income households. Both the current and Draft Housing Elements say that the City should enable issuance of mortgage revenue-bonds for below-market financing of assisted rental units. Federal regulations require that at least 20 percent of the project's units be offered for low- or moderate-income renters. At this time, it appears that either a 15- or 25-year bond term is possible. The project owner understands that the Housing Authority, as the bond issuing agency, will require an extension of affordability guarantees, again coinciding with the bond term. This would allow continuation of the Authority's Section 8 Rental Assistance Program at Parkwood Village. ALTERNATIVE 1. Do not adopt the draft resolution approving bond issuance by the City's Housing Authority. In this case, the Housing Authority would not issue tax-exempt bonds, and the owner would need to either: 1) refinance using some other financing method, possibly including market-rate financing; or 2) hold off refinancing until the existing bonds mature in 1995. Attachments: -Draft Council Resolution -Letter from property owner -Letter from bond counsel ,bn.:mrm.rpt RESOLUTION NO. (1993 Series) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO APPROVING THE ISSUANCE OF MULTIFAMILY HOUSING REVENUE BONDS (FANNIE MAE PASS-THROUGH CERTIFICATE PROGRAM/PARKWOOD VILLAGE APARTMENTS LOCATED AT 1017- 1045 SOUTHWOOD DRIVE) 1993 SERIES A AND 1993 SERIES B BY THE HOUSING AUTHORITY OF THE CITY OF SAN LUIS OBISPO WHEREAS, the Housing Authority of the City of San Luis Obispo (the "Authority") has heretofore issued its$7,720,000 initial aggregate principal amount Multifamily Housing Revenue Bonds Series 1985 (Fannie Mae Program/Parkwood Village Apartments Project) (the "Prior Bonds") pursuant to Chapter 1 of Part 2 of Division 24 of the California Health and Safety Code, as supplemented and amended to finance the acquisition and construction of a 168-unit multifamily apartment rental project (the "Project") located at 1017 - 1045 Southwood Drive in the City of San Luis Obispo; and WHEREAS, the Authority proposes to issue its Multifamily Housing Revenue Bonds (Fannie Mae Pass-Through Certificate Program/Parkwood Village Apartments Project) 1993 Series A and 1993 Series B in an amount not to exceed $7,900,000 pursuant to Chapter 1 (beginning with Section 34200) of Part 2 of Division 24 of the California Health and Safety Code, as supplemented and amended (the "Bonds") to refund the Prior Bonds; and WHEREAS, notice of a public hearing with respect to the proposed issuance of the bonds was published on July 6, 1993 in the Telegram - Tribune, a newspaper of general circulation in the City of San Luis Obispo; and WHEREAS, said public hearing was held before the City Council of the City of San Luis Obispo on July 20, 1993, and an opportunity was provided for interested persons to present 1-� Council Resolution No. (1993 Series) Page 2 arguments for and against the issuance of the Bonds; and WHEREAS, this City Council is the elected legislative body of the City of San Luis Obispo, and is the applicable elected representative required to approve the issuance of the Bonds within the meaning of Section 147 (f) of the Internal Revenue Code of 1986, as amended (the "Code"); NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO AS FOLLOWS: Section 1. Recitals. Each of the foregoing recitals is correct. Section 2. Approval of the Bonds. The City Council hereby approves the issuance of the Bonds by the Authority to prepay the Prior Bonds and to refinance the Project. It is the purpose and intent of this City Council that this Resolution shall constitute the approval of the Bonds by the appropriate applicable elected representative in accordance with Section 147 (f) of the Code. Section 3. Effective Date. This Resolution shall take effect immediately upon adoption. 1 Upon motion of , seconded by , and on the following roll call vote: AYES: NOES: ABSENT: �',cf Resolution No. (1993 Series) Page 3 the foregoing resolution was adopted this 20th day of July, 1993. Mayor Peg Pinard ATTEST: Diane Gladwell, City Clerk I, Diane Gladwell, City Clerk of the City of San Luis Obispo, do hereby certify that the foregoing Resolution was regularly introduced and adopted by the City Council of the City of San Luis Obispo at a regular meeting thereof held on the 20th day of July, 1993, by the aforementioned vote of the City Council. IN WITNESS WHEREOF, I have hereunto set my hand this day of July, 1993. City Clerk of the City of San Luis Obispo APPROVED: of gen n, C' Atl6mey �'S RECE TE' JUN 2 1993 SOUTHWOOD PROJECT a California Limited Partnership POST OFFICE BOR 283 A` SAN LUIS OBISPO, CALIFORNIA 93406 SANS`:;` 1.31 '0.CA (805) 544-7343 (Telephone) (805) 544-1177 (Facsimile) June 28, 1993 Mr. John Dunn RECCIVFv Chief Administration Officer JUN City of San Luis Obispo Q 1993 Post Office Box 8100CmOFggN San Luis Obispo, California 93403 NmoF�ZLc lss o Dear Mr. Dunn: SUBJECT: Parkwood Village Apartments I am writing this letter as representative of the ownership of the above-referenced property. This property was built and financed in 1985 with tax-exempt bond proceeds issued by the Housing Authority of the City of San Luis Obispo. In return for the tax-exempt interest rate, we set aside twenty percent (20%) of the units for people of low and moderate income. Since 1985, interest rates have declined and we now have the option of refinancing the debt. The refinancing will allow the property to more effectively service the loans, thus, enhancing the ability to offer low and moderate units. For our refinancing, Bond Counsel has informed me that we will need to hold a TEFRA hearing at. the City prior to the issue. The notice for this hearing should be at least two weeks prior to the hearing. I would like to request a hearing to be held at your regular council meeting, July 20, 1993 . It is my understanding that the actual notice, publication, and hearing are relatively simple. Francis Baum of Best, Best & Krieger, Riverside, has done this many times and is available to work with you and your staff as is necessary to complete the hearing. He can be reached at (714) 686-1450. Mr. George Maylan, Executive Director at the Housing Authority of the City of San Luis Obispo is also working closely with Bond Counsel and myself, and is available for help as needed. Mr. John Dunn June 28, 1993 Page Two Thank you in advance for your consideration. Sincerely, SOUTHWOOD PROJECT a California Limited Partnership Patri k N. Smith Agent for Owner :sln fn:swood\duan cc: Ms. Diane Gladwell Mr. George Moylan Mr. Francis Baum BEST, BEST & KRIEGER .•u+ncus.-.+c;_eme cwrc��ann ww.ou.no.n LAWYERS ARTHUR L.LITTLEWORTH' ANTONIA GRAPHOS STEVEN C.D4BAUN MARY GILSTRAP 400 MISSION SQUARE GLEN E.STEPHENS• GREGORY K.'NILKINSON BRANT H.OVEIRIN DANIEL C.PARKER.JR. 3750 UNIVERSITV AVENUE WILLIAM R.OeWOLFE' WYNNE S.FURTH ERIC L.GARNER GINEVRA C.MARUM POST OFFICE BOX 1028 BARTON C.GAUT' DAVID L.BARON DENNIS M.COCA GLENN P.SABINE RIVERSIDE. CALIFORNIA 92502 1028 PAUL T.SELZER- GENE TANAKA JULIE HAYWARD BIGGS CHRISTINE L.RICHARDSON DALLAS HOLMES' BASIL T.CHAPMAN RACHELLE J.NICOI.-E JOANE GARCIA-COLSON TELEPHONE (909)6861450 CHRISTOPHER L.CARPENTER- TIMOTHY M.CONNOR ROBERT W.HARGREAVES PHILIP J.KOEHLER RICHARD T.ANDERSON' VICTOR L.WOLF JANICE L.WEIS DIANE C.WIESE TELECOPIERS JOHN O.WAHUN' DANIEL E.OLIVIER SHARYL WALKER REBECCA MARES GURNEY (909)686-3083 • 582 4612 MICHAEL D.HARRIS' DANIEL J.MCHUGH PATRICK H.W.F PEARCE ALLISON C.HARGRAVE W CURT EALY' HOWARD B.GOLDS KIRK W.SMITH DOROTHY[.ANDERSON THOMAS S.SLOVAK' STEPHEN P.DEITSCH JASON O.DABAREINER G.HENRY WELLES JOHN E.BROWN' MARC E.EMPEY KYLE A.SNOW JAMES R.HARPER MICHAEL T.RIDDELL' JOHN R.ROTTSCHAEFER MARK A.EASTER DINA O.HARRIS MEREDITH A. JURY- MARTIN A.MUELLER DIANE L.FINLEY BARBARA R.BARON OF COUNSEL MICHAEL GRANT' J.MICHAEL SUMMEROUR MICHELLE OUELLETTE RICHARD T.EGGER JAMES B.CO BISON FRANCIS J.BAUM' VICTORIA N.KING PETER M.BARMACK PATRICK D.DOLAN ANNE T. THOMAS' JEFFERY J.CRANDALL DAVID P.PHIPPEN.SR. DEAN R.DERLETH D.MARTIN NETHERY' SCO TT C.SMI TH SUSAN C.NAUSS HELENE P.DREYER GEORGE M.REYES JACK B.CLARKE.JR. CHRISTOPHER DODSON EMILY P.HEMPHILL WILLIAM W.FLOYD.JR. BRIAN M.LEWIS BERNIE L.WILLIAMSON SONIA RUBIO SHARMA GREGORY L.HARDKE JEANNETTE A.PETERSON ELAINE E.HILL 'JOHN 0.PINKNEY KENDALL H.MAAVEY BRADLEY E.NEUFELD KEVIN K.RANDOLPH OFFICES IN CLARK H.ALSOP' ELISE K.TRAYNUM JAMES B.GILPIN PALM SP DAVID J.ERWIN- WILLIAM D.DAHLING.JR. MARSHALL S.RUDOLPH RAYMOND BEST 118RINGS(6191325-7264 1619155-7 68-1957) RANCHO SPRINGS GE MICHAEL J.ANDELSON' MATT H.MORRIS KIM A.BYRENS JAMES H.KRIEGER(1913-1975) 2611 DOUGLAS S.PHILLIPS' JEFFREY V.DUNN CYNTHIA M.GERMANO EUGENE BEST(1893-1981) ONTARIO(909)989.8484 •.•AOF[Samr.JlL rAAroRAnoH June .29 , 1993 VIA UPS Mr. John Dunn Chief Administrative Officer City of San Luis Obispo 990 Palm Street San Luis Obispo, CA 93401 Re: Housing Authority of the City of San Luis Obispo Southwood Apartments Project Dear Mr. Dunn: It is my understanding that Patrick Smith, the owner of the above-named project, has spoken and written to you recently with respect to the proposed refinancing the Southwood Apartment Project. The project was originally financed with a $7, 720 , 000 bond issue of the Housing Authority of the City of. San Luis Obispo. The Bonds are secured by a pass-through certificate issued by the Federal National Mortgage Association. Mr. Smith and FNMA wish to undertake a refinancing of the existing bonds with a new bond issue that will also be secured by a new FNMA pass-through- certificate. Although the Bonds will be issued by the Housing Authority, Federal tax law requires that a noticed public hearing with respect to the proposed issuance of the Bonds be conducted by the City Council of the City of San Luis Obispo, as the elected governing body of the local jurisdiction. The schedule in this financing contemplates a need to close prior to the end of July. Accordingly, it is my understanding that Mr. Smith has requested that the public hearing (often referred to as a IITEFRA hearing" ) be held on July 20, 1993 . Federal tax law requires that a published notice of the hearing be published in a local newspaper at least 14 days prior to the hearing (which would mean publication on or before Tuesday, July 6, 1993) . It is my understanding from FJ8173512 Q �U LAW OFFICES OF BEST, BEST & KRIEGEI Mr. John Dunn June 29 , 1993 Page 2 speaking with Diane Gladwell , the City Clerk,. that she will need to have the notice of the public hearing to the newspaper. by Thursday afternoon, July 1st. Accordingly, please find enclosed a form of the notice of the public hearing. It sets the Council Chambers and the date of July 20 as the public hearing date. The hour of the public hearing needs to be completed in the notice before it is sent to the paper. I have also enclosed a suggested form of an approving resolution that the City Council would adopt at the conclusion of the public hearing. The resolution approves the issuance of the Bonds as required by Federal tax law by the City. It does not obligate the City in any way with respect to the Bond issue. It contains one blank as to the name of the newspaper in which publication was made. After you have reviewed the notice and resolution, I will be happy to revise them with any comments you may have. Very truly yours, 1 Of%", Q CU*Irl Fr cis J. Baum of Best, Best & Krieger FJB:jcq . cc: Ms . .Diane Gladwell, City Clerk, City of San Luis Obispo Mr. Jeff Hook, Planning Department, City of San Luis Obispo FJ8173512 mEETING AGENDA DATE H ITEM # City of San Luis Obispo . Community Development Department MEMORANDUM TO: Diane Gladwell FROM: Arnold Jon VIA: John Mand FROM: Jeff Ho k DATE: July 19, SUBJECT: Revised Council Resolution, Item #1, July 20th hearing ************************************************************* Councilwoman Rappa suggested a change to the enabling resolution for the Housing Authority bond issuance. The requested change would reference affordability provisions agreed to as part of the bond issuance. The Housing Authority will require the affordability provision as part of its bond agreement with the property owner to extend the Section 8 rental assistance program administered by the Housing Authority for at least 15 additional years. I've attached a revised resolution which references that provision. •:OFL TO: ❑!t'}_ctcs AcFon / ❑ FY! t r l R C0-D DSR. cc: Jeff Jorgensen ❑ r,.E �fJ[. _ ❑ RESOLUTION NO. (1993 Series) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO APPROVING THE ISSUANCE OF MULTIFAMILY HOUSING REVENUE BONS (FANNIE MAE PASS-THROUGH CERTIFICATE PROGRAM/PARKWOOD VILLAGE APARTMENTS LOCATED AT 1017- 1045 SOUTHWOOD DRIVE) 1993 SERIES A AN 1993 SERIES B BY THE HOUSING AUTHORITY OF THE CITY OF SAN LUIS OBISPO WHEREAS, the Housing Authority of the City of San Luis Obispo (the "Authority") has heretofore issued its$7,720,000 initial aggregate principal amount Multifamily Housing Revenue Bonds Series 1985 (Fannie Mae Program/Parkwood Village Apartments Project) (the "Prior Bonds") pursuant to Chapter 1 of Part 2 of Division 24 of the California Health and Safety Code, as supplemented and amended to finance the acquisition and construction of a 168-unit multifamily apartment rental project (the "Project") located at 1017 - 1045 Southwood Drive in the City of San Luis Obispo; and WHEREAS, the Authority proposes to issue its Multifamily Housing Revenue Bonds (Fannie Mae Pass-Through Certificate Program/Parkwood Village Apartments Project) 1993 Series A and 1993 Series B in an amount not to exceed $7,900,000 pursuant to Chapter 1 (beginning with Section 34200) of Part 2 of Division 24 of the California Health and Safety Code, as supplemented and amended (the "Bonds") to refund the Prior Bonds; and WHEREAS, notice of a public hearing with respect to the proposed issuance of the bonds was published on July 6, 1993 in the Telegram - Tribune, a newspaper of general circulation in the City of San Luis Obispo; and WHEREAS, said public hearing was held before the City Council of the City of San Luis Obispo on July 20, 1993, and an opportunity was provided for interested persons to present Council Resolution No. (1993 Series) Page 2 arguments for and against the issuance of the Bonds; and 'WHEREAS, the pioposeti band 'ssuartcew�ll promote the City's affordable housing objecttves since the property owner has agreed, as a zonditiX.on of bflnd%t5suance,;to cop..UAP to lease a mvumum:of 211 percent of the Paikkbd Village's 16$ units undeF the Section $ assisted rental hou;stng program, qr its successor; thraagh the San Laic. .O. .b. Housing Authpnty I'uTt$e ti e property owner has agreed to extend;said prob am.unhl at least 7u1y:1, ZQl 8, and WHEREAS, this City Council is the elected legislative body of the City of San Luis Obispo, and is the applicable elected representative required to approve the issuance of the Bonds within the meaning of Section 147 (f) of the Internal Revenue Code of 1986, as amended (the "Code"); NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO AS FOLLOWS: Section 1. Recitals. Each of the foregoing recitals is correct. Section 2. Approval of the Bonds. The City Council hereby approves the issuance of the Bonds by the Authority to prepay the Prior Bonds and to refinance the Project. It is the purpose and intent of this City Council that this Resolution shall constitute the approval of the Bonds by the appropriate applicable elected representative in accordance with Section 147 (f) of the Code. Section 3. Effective Date. This Resolution shall take effect immediately upon adoption. Upon motion of , seconded by , and on the following roll call vote: Resolution No. (1993 Series) Page 3 AYES: NOES: ABSENT: the foregoing resolution was adopted this 20th day of July, 1993. Mayor Peg Pinard ATTEST: Diane Gladwell, City Clerk I, Diane Gladwell, City Clerk of the City of San Luis Obispo, do hereby certify that the foregoing Resolution was regularly introduced and adopted by the City Council of the City of San Luis Obispo at a regular meeting thereof held on the 20th day of July, 1993, by the aforementioned vote of the City Council. IN WITNESS WHEREOF, I have hereunto set my hand this day of July, 1993. City Clerk of the City of San Luis Obispo APPROVED: J J e)/,7 rney